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Is intrinsic extrinsic the money, out of the money? In part i what are in the money, assignment? The contract stipulates:. What is an option? Profit: the maximum profit is the premium you sold the option for. The four basic options strategies introduction the easiest way to learn options is with pictures so that you can begin to piece together strategies step- by- step. An option is simply a contractual agreement between two parties, the buyer and the seller. Ancient romans, greeks, and phoenicians traded options based on outgoing cargoes from their local seaports.
An option is a contract between two parties giving the taker ( buyer) the right, but not the obligation, to buy or sell a security at a predetermined price on or before a predetermined date. Option basics: a crash course in option mechanics chapter chapter # 1 option basics: a crash course in option mechanics the concept of options has been around for a long time. Or buy the option back to close. From that point, logic kicks in, and our learning can progress exponentially. Volatility: the option value will increase as volatility increases ( bad). • the strike price is the price at which you can buy or sell shares • expiration date is the last day you can exercise an option – automatically executed on this day • underlying asset is the stock on which the option is written • price of the option is how much investor pays for the right to buy or sell ( a. Loss: the maximum loss is the strike price a, less the premium received. What makes up an option? However, first we need to understand the four basic strategies.
To acquire this right, the taker pays a premium to the writer ( seller) of the contract. Fundamentals to need to be familiar of are option topics that will be covered are options? The break- even point will be the options strike price a, minus the premium received for the option.
