Management and Organizational Studies 1023A/B Lecture Notes - Lecture 9: Call Option, Chicago Board Options Exchange, Montreal Exchange
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MOS 1023A/B Full Course Notes
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Financial derivative securities: derive all or part of their value from. Why trade these indirect claims: expand investment opportunities, lower cost, increase leverage. The returns are magnified with the same transaction: options are created by investors, sold to other investors, option on shares. Options are created by an investor for another investor: seller is called the writer, buyer is called the holder, call: Buyer has the right, but not the obligation, to purchase a fixed quantity from the seller at a fixed price up to a certain date. Buyer has the right, but not the obligation, to sell a fixed quantity to the seller at a fixed price up to a certain date. The buyer can sell back the stock to the writer: put: Option terminology: exercise (strike) price: purchased or sold, expiration date: The per share price at which the common stock may be.