- This topic has 327 replies, 321 voices, and was last updated 2 years, 8 months ago by
.
-
Posts
-
Buying Call options gives the buyer the right, but not the obligation, to “buy” shares of a stock at a specified price on or before a given date.
Buying “Put options” gives the buyer the right, but not the obligation, to “sell” shares of a stock at a specified price on or before a given date.
Both buyer and seller decides the premium.
Call option is a contract which gives buyer the right to buy with no obligations.
Put option is a contract which gives buyer the right to sell with no obligations.
Premium is decided by seller of contract.
Call option – buyer of this option gets the rights to buy the shares on the price mentioned in the contract but without obligation.
Put option – buyer of this option gets the rights to sell the shares on the price mentioned in the contract but without obligation.
If a contract is signed for a trade which will get expired on April 31st and it is 100 and anything above the value of 100 the buyer will make money, so the buying will get the rights to buy the share without obligation is called call option. If the buyer feels the value of the shares will go down below 100 and he will make profit then he will have right to sell the share without obligation. Since the seller takes risk either way so he needs to sign a contract without any rights and so the premium will be decided between the seller and the buyer.
In call option the buyer expects the price of the stock to go up and signs the contract . he has rights to buy but no obligation.
In put option the buyer expects the price of the stock to go down and signs the contract. he has rights but no obligation.
premium is determined by the seller and buyer.
- You must be logged in to reply to this topic.
