Search results
Results from the WOW.Com Content Network
Conversely, a call option with a $120 strike is out-of-the-money and a put option with a $120 strike is in-the-money. The above is a traditional way of defining ITM, OTM and ATM, but some new authors find the comparison of strike price with current market price meaningless and recommend the use of Forward Reference Rate instead of Current ...
Put option: A put option gives its buyer the right, but not the obligation, to sell a stock at the strike price prior to the expiration date. When you buy a call or put option, you pay a premium ...
Using put–call parity a long butterfly can also be created as follows: Long 1 put with a strike price of (X + a) Short 2 puts with a strike price of X; Long 1 put with a strike price of (X − a) where X = the spot price and a > 0. All the options have the same expiration date. At expiration the value (but not the profit) of the butterfly ...
A box spread consists of a bull call spread and a bear put spread. The calls and puts have the same expiration date. The resulting portfolio is delta neutral. For example, a 40-50 January 2010 box consists of: Long a January 2010 40-strike call; Short a January 2010 50-strike call; Long a January 2010 50-strike put; Short a January 2010 40 ...
The naked put profit/loss profile is similar to the covered call (see above) profit/loss profile. The naked put generally requires less in brokerage fees and commissions than the covered call. The following return calculation assumes the sold put option is out-of-the-money and the price of the stock at expiration is greater than the put strike ...
For example, a bull spread constructed from calls (e.g., long a 50 call, short a 60 call) combined with a bear spread constructed from puts (e.g., long a 60 put, short a 50 put) has a constant payoff of the difference in exercise prices (e.g. 10) assuming that the underlying stock does not go ex-dividend before the expiration of the options.
Upgrade to a faster, more secure version of a supported browser. It's free and it only takes a few moments:
Profits from buying a call. Profits from writing a call. In finance, a call option, often simply labeled a "call", is a contract between the buyer and the seller of the call option to exchange a security at a set price. [1]