Good afternoon, dear friends!Well, are you ready for a new piece of information? Today we have prepared for you a very interesting material.
This time our headline topic is "an option"
About the option we can say that this is one of the most complex financial instruments traded on the stock exchange.
In general, an option is a special type of contract the subject of which is not the asset itself but the right to sell or buy it. Thus, a seller agrees with a buyer to sell a certain asset at a predetermined cost and the buyer has the right to buy the asset at this price, but is not obliged, i.e. he may not make a deal.
The price of the asset specified in the contract is called strike (eng. strike price). It may differ from the market price that has developed on the asset. (spot price).
Types of options are divided into: 1) by action, 2) by the period of execution, 3) by type of asset.
Now let's take a closer look at each of them.
It is accepted to allocate 2 types of options on action:
1. Call Options. (To purchase goods.)They ensure buyer's right to acquire the underlying asset. At the same time, a call option is an obligation of seller to sell it.
2. Put Options. (On the sale of an asset.) This type of option ensures the right of buyer to sell the asset. At the same time, put option is an obligation of the seller to purchase the underlying asset.
By the term of execution options are divided into:
1. European-can be presented by buyer only on the LAST day of the option.
2. American. Everything is quite different here, it can be executed absolutely on any working day in the period from the date of the transaction to the date of execution. That is, during the entire term of the contract.
And the last, by the form of an asset is usually divided into:
1. Currency option. It gives the right to buy or sell foreign currency.
2. Stock option. The option holder buys or sells shares.
3. Commodity option. Gives the right to sell or buy a certain amount of goods (for example, oil, platinum, silver, gold)
There are many other parameters for classifications, we have identified only the most basic.
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