Ch 14 - Chapter 14 Options Markets 1 Background on Options...

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1 Chapter 14 Options Markets
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2 Background on Options Call option grants the owner the right to purchase a specified financial instrument for a specified price within a specified period of time In the money At the money Out of the money
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3 Buying a call option Gain Loss 0 Premium Paid (Price to purchase Option) Strike Price Profit Gain Market Price
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4 Selling a call option Gain Loss 0 Premium Received Strike Price Profit Loss Market Price
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5 Background on Options Put option grants the owner the right to sell a specified financial instrument for a specified price within a specified period of time In the money At the money Out of the money
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6 Buying a put option Gain Loss 0 Premium Strike Price Market Price
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7 Selling a put option Gain Loss 0 Premium Strike Price Market Price Loss
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8 Background on Options Call and put options specify 100 shares for stocks Participants can close out their option positions by taking an offsetting position American-style options can be exercised at any time prior to expiration European-style options can be exercise only just before expiration
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9 Markets used to trade options CBOE AMEX Philadelphia Stock Exchange Pacific Stock Exchange International Securities Exchange
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10 Markets used to trade options
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This document was uploaded on 11/29/2009.

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Ch 14 - Chapter 14 Options Markets 1 Background on Options...

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