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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
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.
- Fall '13