Abstract: This chapter highlights the relation between investment tool and stock market. Options of one kind or another are commonplace in the business world, such as the option to purchase real estate. This chapter is an introduction to the use of options as an investment tool. It also deals with the basic concepts of options and how and why an investor would use them. An option giving the buyer the right to purchase the stock at a fixed price is called a call option. An option giving the buyer the right to sell the stock at a fixed price is known as a put option. The underlying security is the specific stock on which an option contract is based. Options are derivative securities, because their values are derived in part from the value and characteristics of the underlying security. The strike price is the price per share that the holder of the option must pay to buy the corresponding stock, if they choose to exercise their right. The strike price for an option is initially set at a price that is close to the current share price of the underlying security.
Publication Year: 2012
Publication Date: 2012-01-02
Language: en
Type: other
Indexed In: ['crossref']
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