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AREC 384 options
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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
call option
right to take a long position (buy futures) at some point in the future
put option
the right to take a short position (sell futures) at some point in the future
premium
the price of an option
ex. cover charge you pay at a bar, you pay it then its gone
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
the more _____ the strike price, the _______ your premium
adventageous
higher
in-the-money
call options at strike prices below the current futures price are said to be "in-the-money"
out-of-the-money
put options at strike prices below the current futures price are said to be "out-of-the-money"
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
2016-10-26T01:19:33Z
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