An option series is a group of options contracts of the same type (i.e. put or call) that are created at the same time and have the same expiration date. All options in a series are identical in terms of the underlying security, strike price, and expiration date. What is advanced option strategy? There is no single definition of an advanced option strategy, as there are many different ways to trade options depending on your objectives and market conditions. However, some common advanced strategies include butterfly spreads, straddles, and strangles. These strategies can be used to capitalize on Volatility, earn income, or hedge against a decline in the underlying asset.
How call option works with example? A call option gives the holder the right, but not the obligation, to buy a stock at a certain price (the strike price) by a certain date (the expiration date). The buyer pays a premium for this right.
For example, let's say you buy a call option on XYZ stock with a strike price of $50 and an expiration date of March 16. This means that you have the right to buy XYZ stock at $50 any time before the expiration date. If, on March 16, XYZ stock is trading at $55, you can exercise your option and buy the stock at $50, then turn around and sell it immediately at the current market price of $55, for a profit of $5 per share.
If, on the other hand, XYZ stock is trading at $49 on March 16, you would not exercise your option because you can buy the stock for $49 on the open market, so you would just let the option expire. In this case, you would lose the $1 premium you paid for the option.
There is no obligation to exercise your option, even if it is in the money.
Options are a leveraged investment, which means that you can control a large number of shares of stock with a relatively small amount of money. For example, let's say XYZ stock is trading at $50 and you want to buy 100 shares. This would cost you $5,000.
Now, let's say you buy one XYZ $50 call option for $1. This gives you the right to buy 100 shares of XYZ stock at $50 any time before the expiration date. If XYZ stock goes up to $55, you can exercise your option and buy the stock at $50, then turn around and sell it immediately at the current market price of $55, for a profit of $500.
Your return What are two types of options? 1. Call Options
2. Put Options What are the determinants of option? -The underlying asset
-The strike price
-The expiration date
-The interest rate
What are the types of option contract? Options contracts are typically of two types: calls and puts.
A call option gives the holder the right, but not the obligation, to buy the underlying asset at a specified price on or before a specified date.
A put option gives the holder the right, but not the obligation, to sell the underlying asset at a specified price on or before a specified date.
The price at which the underlying asset can be bought or sold is known as the strike price, and the specified date is known as the expiration date.
The party who sells the option is known as the writer, and the option fee paid by the holder to the writer is known as the premium.