Backdating options definition

by  |  13-Sep-2016 13:35

Investors buy puts if they think the stock is going down or if they own the stock and want to hedge against a possible price decline.A call is the right, but not the obligation, to buy a stock in the future.Investors buy calls if they think the stock is going up in the future or if they sold the stock short and want to hedge against a possible surge in price.

This trigger price is referred to as the exercise or strike price, and it determines the price of the option.

If an investor owns call options for a stock trading at $50 with an exercise price of $45, it means the call options are trading in the money by $5.

The exercise price is lower than the price at which the stock is currently trading.

The exercise price is the price at which an underlying security can be purchased (call option) or sold (put option).

The exercise price is determined at the time the option contract is formed.

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