Call - Equity Derivatives Provision: Difference between revisions
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{{eqderivanat|2.3(a)}} | {{eqderivanat|2.3(a)}} | ||
The basic definition of a [[call option]]. I am entitled to buy shares from you at a pre-agreed price ({{eqderivprov|Strike Price}}) on a pre-agreed date (i.e., a {{eqderivprov|European Option}}) or a any time up to a pre-agreed date (i.e., an {{eqderivprov|American Option}}). | |||
At any time where the prevailing share price is above the {{eqderivprov|Strike Price}}, your option is [[in-the-money]]. If the share price is below the {{eqderivprov|Strike Price}} it is [[out-of-the-money]]. The option has [[time value]] though, so just because it it out of the money it doesn't mean it's worthless. | |||
Revision as of 14:54, 9 November 2018
Template:Eqderivanat The basic definition of a call option. I am entitled to buy shares from you at a pre-agreed price (Strike Price) on a pre-agreed date (i.e., a European Option) or a any time up to a pre-agreed date (i.e., an American Option).
At any time where the prevailing share price is above the Strike Price, your option is in-the-money. If the share price is below the Strike Price it is out-of-the-money. The option has time value though, so just because it it out of the money it doesn't mean it's worthless.