Karteikarten
Finance - Options
Karten in diesem Stapel (10)
- 1An options is an example of a ... The price is derived from the price of the ... Derivatives can be used for managing ...... derivative security
... underlying asset
... risk - 2An option is an ... The underlying asset will be anything with a ... movement There is choice whether to ... the underlying asset An agreement to buy is a ... option An agreement to sell is a ... option You need to pay a ... when you buy a call or put option... agreement made today to buy or sell the underlying asset at a future date with the price agreed today
... price
... exercise(buy or sell)
... call
... put
...premium - 3A European call option you exercise at ... A American option you can exercise at ... With the call or put option contracts you pay the premium ... and have the right to exercise at the ...... maturity
... anytime
.... now ... maturity date - 4CALL OPTION If the share price is > than what was stated when you bought the contract then would you exercise the option? If the share price is < than what was stated when you bought the contract then would you exercise the option? Share - ExerciseYes you'd buy the shares at the agreed lower price and then sell them at the current higher price to gain a profit
No you would choose to not exercise the function - 5PUT OPTION If the share price is > than what was stated when you bought the contract then would you exercise the option? If the share price is < than what was stated when you bought the contract then would you exercise the option? Exercise - ShareNo we would not exercise this option
Yes we would want to exercise this option - 6The payoff for the option writer is .. by the amount of premium received The payoff for the option buyer is ... by the amount of premium paid IF A QUESTION ASK ABOUT MATURITY DONT NEED TO ADD PREMIUM IF IT MENTIONS COMBINED PAYOFF THEN DO!... increased
... reduced - 7An option being in the money means it is ... An option being out the money means it is ... The intrinsic value if the option is out of the money is ... Time Value = ?... worthwhile to exercise
... not worthwhile to exercise
... 0
Premium - Intrinsic Value - 8What are 3 factors that affect option prices? 2 further factors are? As strike/exercise price increase call option premium ... As strike/exercise price increase put option ...1) Exercise price 2) Time to maturity 3) The price of the underlying asset
1) Risk free rate of interest 2) Volatility of returns on the underlying asset
...decrease
...increase - 9Share price has a ... relationship for call options and a ... relationship for put options A time to maturity increase option price increase so both call and put have ... relationships... positive ... negative
... positive - 10Risk free rate of interest has a ... relationship for call options and a ... relationship for put options Volatility is a ... thing for options... positive ... negative
... good
Informationen
- Beschreibung
- Karteikarten am Finance - Options, erstellt von Cara Wales am 02/06/2016.
- Erstellt von
- Cara Wales
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