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Call options are “in the money” when the stock price is above the strike price. The call owner can exercise the option, putting up cash to buy the stock at the strike price.
Options trading can be complex, and the trading jargon may confuse even experienced investors and traders. Two of the most common options contracts to understand are call and put options.
Option values vary with the value of the underlying instrument over time. The price of the call contract must act as a proxy response for the valuation of: the expected intrinsic value of the option, defined as the expected value of the difference between the strike price and the market value, i.e., max[S−X, 0]. [3]
Option strategies are the simultaneous, and often mixed, buying or selling of one or more options that differ in one or more of the options' variables. Call options, simply known as Calls, give the buyer a right to buy a particular stock at that option's strike price.
Equity options are the most common type of equity derivative. [1] They provide the right, but not the obligation, to buy (call) or sell (put) a quantity of stock (1 contract = 100 shares of stock), at a set price (strike price), within a certain period of time (prior to the expiration date).
This means that you can buy one call option on Microsoft stock that expires on the third Friday of July for $83.08. As each option gives you the right to control 100 shares, that $83.08 price will ...
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