To address this wish derivatives known as options are traded. The two most famous ones are call options and put options. In this article we discuss first call options, later put options. Definition (Call Option)A call option gives the investor the right (not the obligation!) to buy an ...
在标的资产价格上升时行权，可以获利，（即价差）。在标的资产价格下降时不行权，损失为行权费。Put Opt...
Take a look at the screen shot to the right that is from my Etrade account. This shows that Microsoft (MSFT) is at $25.81 and that the April options expire on April 16, 2011 and that the strike prices for the call option and put options range from at least $23 to $28 and are a...
Exhibit C.4: The payoff‐ and profit‐diagram of a Purchased Put Option If you believe that the underlyer is going to fall, then you really should buy a Put Option b/c in this scenario you can sell the underlyer for more than it is worth. The payoff function of a Purchased Put...
Just like selling a call option, a put option sale means the seller receives the premium up front at the time of trade and keeps this amount no matter what the outcome of the option. You might think that selling put options is very risky when looking at the payoff graph as the downside...
A call option gives a trader the right to buy the asset, while a put option gives traders the right to sell the underlying asset. Traders would sell a put option if they are bullish on the asset's price and sell a call option if they are bearish on the price. ...
1) Portfolio 1 break-even. Draw the gross and net payoff diagrams for a portfolio which is constructed from buying one call option with a strike price $45.00 and selling one call option with a strike price of $50. The cost of.
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The call of $55CE cost him $9, and the PUT of $55PE cost him $6 with a lot size of 500 shares. Thus his total cost is as follows: Now by entering into this strategy, Ryan profit/loss potential on expiry will be as follows: Thus, from the above call option hedge example, the...
What is the option to abandon? The option to expand? Explain why we tend to underestimate NPV, when we ignore these options. With aid of payoff diagrams, explain carefully the difference between selling a call option and buying a pu...