AREC 384 options

  1. options
    • first step to being able to buy or sell a futures contract
    • the right but NOT the obligation to engage in a certain activity
  2. call option
    right to take a long position (buy futures) at some point in the future
  3. put option
    the right to take a short position (sell futures) at some point in the future
  4. premium
    • the price of an option
    • ex. cover charge you pay at a bar, you pay it then its gone
  5. strike price
    • the price at which the options holder can take a position in the futures market should she decide to¬†
    • aka "exercise price"
    • ex. price of drinks at a bar if you choose what you pay
  6. the more _____ the strike price, the _______ your premium
    • adventageous
    • higher
  7. in-the-money
    call options at strike prices below the current futures price are said to be "in-the-money"
  8. out-of-the-money
    put options at strike prices below the current futures price are said to be "out-of-the-money"
  9. at-the-money
    when the strike price is equal to the current futures price, its known as being "in-the-money"
Author
hcunning
ID
324932
Card Set
AREC 384 options
Description
lecture 14
Updated