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  2. Options vs. stocks: Which one is better for you? - AOL

    www.aol.com/finance/options-vs-stocks-one-better...

    The table below summarizes some of the key differences between stocks and options. Characteristic. Stocks. Options. Potential upside. High. Very high (and quickly) Risk. High. Very high. Lifetime.

  3. Options vs. Stocks: Which One Is Better for You? - AOL

    www.aol.com/options-vs-stocks-best-184007291.html

    Options vs. Stocks: Which Is Right for Your Investment Portfolio? This options vs. stocks comparison will help you determine which investment type will best help you reach your financial goals. Stocks

  4. Option (finance) - Wikipedia

    en.wikipedia.org/wiki/Option_(finance)

    A trader who expects a stock's price to increase can buy a call option to purchase the stock at a fixed price (strike price) at a later date, rather than purchase the stock outright. The cash outlay on the option is the premium. The trader would have no obligation to buy the stock, but only has the right to do so on or before the expiration date.

  5. Strike price - Wikipedia

    en.wikipedia.org/wiki/Strike_price

    Strike price labeled on the graph of a call option.To the right, the option is in-the-money, and to the left, it is out-of-the-money. In finance, the strike price (or exercise price) of an option is a fixed price at which the owner of the option can buy (in the case of a call), or sell (in the case of a put), the underlying security or commodity.

  6. Finite difference methods for option pricing - Wikipedia

    en.wikipedia.org/wiki/Finite_difference_methods...

    Finite difference methods were first applied to option pricing by Eduardo Schwartz in 1977. [2] [3]: 180 In general, finite difference methods are used to price options by approximating the (continuous-time) differential equation that describes how an option price evolves over time by a set of (discrete-time) difference equations. The discrete ...

  7. How to identify the best stocks for options trading - AOL

    www.aol.com/finance/identify-best-stocks-options...

    Call options rise in price when the underlying stock rises in price, and this basic option strategy gives the call owner the ability to profit with unlimited upside for the duration of the option ...

  8. Valuation of options - Wikipedia

    en.wikipedia.org/wiki/Valuation_of_options

    The intrinsic value is the difference between the underlying spot price and the strike price, to the extent that this is in favor of the option holder. For a call option, the option is in-the-money if the underlying spot price is higher than the strike price; then the intrinsic value is the underlying price minus the strike price.

  9. Black–Scholes equation - Wikipedia

    en.wikipedia.org/wiki/Black–Scholes_equation

    where (,) is the price of the option as a function of stock price S and time t, r is the risk-free interest rate, and is the volatility of the stock. The key financial insight behind the equation is that, under the model assumption of a frictionless market , one can perfectly hedge the option by buying and selling the underlying asset in just ...

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