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Options are contracts that give their owner the right, but not the obligation, to buy or sell an underlying asset such as a stock. Options come with an expiration date, after which the option ...
In finance, the expiration date of an option contract (represented by Greek letter tau, τ) is the last date on which the holder of the option may exercise it according to its terms. [1] In the case of options with "automatic exercise", the net value of the option is credited to the long and debited to the short position holders.
A compound option is an option on another option, and as such presents the holder with two separate exercise dates and decisions. If the first exercise date arrives and the 'inner' option's market price is below the agreed strike the first option will be exercised (European style), giving the holder a further option at final maturity.
An upcoming U.S. stock options expiration that is set to be the largest on record is tamping down market swings, potentially counterbalancing any gyrations stirred by the Federal Reserve's ...
When an option is exercised, the cost to the option holder is the strike price of the asset acquired plus the premium, if any, paid to the issuer. If the option's expiration date passes without the option being exercised, the option expires, and the holder forfeits the premium paid to the issuer.
American – American-style option contracts can be exercised at any time up to the option's expiration. Under certain circumstances (see below) early exercise may be advantageous to the option holder. Bermudan – Bermudan-style options contracts may only be exercised on specified dates. Bermudan-style options are common in the interest rate ...
For example, imagine a trader bought a call for $0.50 with a strike price of $20, and the stock is $23 at expiration. The option is worth $3 (the $23 stock price minus the $20 strike price) and ...
Triple witching hour is the last hour of the stock market trading session (3:00–4:00 p.m., New York time) on the third Friday of every March, June, September, and December. Those days are the expiration of three kinds of securities: Stock market index futures; Stock market index options; Stock options.