Call option an option to purchase a specified number

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Unformatted text preview: before a set expiration date. call option An option to purchase a specified number of shares of a stock (typically 100) on or before a specified future date at a stated price. striking price The price at which the holder of a call option can buy (or the holder of a put option can sell) a specified amount of stock at any time prior to the option’s expiration date. In the most general sense, an option can be viewed as an instrument that provides its holder with an opportunity to purchase or sell a specified asset at a stated price on or before a set expiration date. Options are probably the most popular type of derivative security. Today, the interest in options centers on options on common stock.12 The development of organized options exchanges has created markets in which to trade these options, which themselves are securities. Three basic forms of options are rights, warrants, and calls and puts. Rights are discussed in Chapter 7, and warrants were described in the preceding section. Calls and Puts The two most common types o...
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This document was uploaded on 01/19/2014.

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