options flashcards

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What are Options? Options are securities that give the owner the right, but not the obligation, to buy or sell an underlying security
_____ is an option that gives the owner the right to buy a security at a specific price A call option
_____ is an option that gives the owner the right to sell a security at a specific price A put option
Options are traded through a ________ Clearing houses on regulated options exchanges
What is the difference between a European Option and an American Option? European options can only be exercised on expiration, while American options can be excises at any time during a trading day or before expiration
Call Options whose strike price is below the market price of the underlying security are termed? In the money call options
Call Options whose strike price is above the market price of the underlying security are termed? Out of the money call options
As the stock price increases the call price _____ increases
Put Options whose strike price is above the market price of the underlying security are termed? In the Money put option
Put Options whose strike price is below the market price of the underlying security are termed? Out of the money put options
The strike price is also known as ______ price exercise price
what is the exercise price? The Exercise price is the price at which the underlying transaction will occur upon exercising the option
what is the exercise date? It is the last date the option can be exercised
what are vanilla options? Vanilla options are options that are not exotic
What factors influence the price of an option? The current price of the underlying stock. The strike price of the option, in the money will be more expensive than out of the money options. Time to expiration. The volatility of the underlying security
Which option has a higher premium, in-the-money or out-of-the-money option? In-the-money options have a higher premium

What are Options?

_____ is an option that gives the owner the right to buy a security at a specific price

_____ is an option that gives the owner the right to sell a security at a specific price

Options are traded through a ________

What is the difference between a European Option and an American Option?

Call Options whose strike price is below the market price of the underlying security are termed?

Call Options whose strike price is above the market price of the underlying security are termed?

As the stock price increases the call price _____

Put Options whose strike price is above the market price of the underlying security are termed?

Put Options whose strike price is below the market price of the underlying security are termed?

The strike price is also known as ______ price

what is the exercise price?

what is the exercise date?

what are vanilla options?

What factors influence the price of an option?

Which option has a higher premium, in-the-money or out-of-the-money option?

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