A call option grants the buyer the opportunity to buy the underlying asset.In the case of stock options, a distinction can be made between call and put options. Both call and put options can be sold and sold.Ĭalls benefit from an increase in the share price, puts from a decline. If the option is not exercised, this is his profit.ĭistinction According to the Business Process However, for this risk, the seller is compensated with the option premium. The seller of the option (silent partnership holder) must then issue or accept the corresponding underlying asset in the event of exercise. In the case of a call option, he could buy the underlying asset at a fixed price in the case of a put option, he could sell it. On the pre-defined due date, the buyer (owner) of the option can thus exercise the associated right. The only decisive factor is which price the underlying asset shows at the maturity date of the option. Even if the underlying asset has risen above the strike price or fallen below it, the option cannot be exercised prematurely. A European option is an option contract that can only be exercised at the end of the term. European options are only be exercised on the predetermined expiry date. The possibility of exercising these options at any time also increases the premium to be paid because the seller wishes to be adequately compensated for this obligation. Whether this always makes sense for the option holder (e.g., due to a high time value and further profit potential) remains unclear. The buyer can also buy the underlying asset before the maturity date, at the strike price (if it is a call option), or sell it (if it is a put option).
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |