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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.
These individual purchases, known as the legs of the spread, vary only in expiration date; they are based on the same underlying market and strike price. The usual case involves the purchase of futures or options expiring in a more distant month--the far leg--and the sale of futures or options in a more nearby month--the near leg. [1]
Stock option expensing is a method of accounting for the value of share options, distributed as incentives to employees within the profit and loss reporting of a listed business. On the income statement, balance sheet, and cash flow statement the loss from the exercise is accounted for by noting the difference between the market price (if one ...
Here’s the profit at expiration on the bear put spread at a range of stock prices. Upside/downside: This spread will be worth $4 at most, or the difference between the $16 and $20 strike prices.
If an option is out-of-the-money at expiration, its holder simply abandons the option and it expires worthless. Hence, a purchased option can never have a negative value . [ 4 ] This is because a rational investor would choose to buy the underlying stock at the market price rather than exercise an out-of-the-money call option to buy the same ...
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 ...
Prior to 2010, [1] standard equity option naming convention in North America, as used by the Options Clearing Corporation, was as follows: For example, an Apple Inc AAPL.O call option that would have expired in December 2007 at a $122.50 strike price would be displayed as APVLZ in old convention (AAPL071222C00122500 in new convention).
As long as the price of the JKH stock is greater than $51 at stock option expiration, the position will be profitable. The percent maximum loss is the difference between the break-even price and the strike price of the purchased put option divided by the net investment, for example for JKH: %Max loss = (51 - 50)/[52.5-(2-0.5)] = 2%