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Call option |
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Call optionAn option contract that gives its holder the right (but not the obligation) to purchase a specified number of shares of the underlying stock at the given strike price, on or before the expiration date of the contract.Call optionA clause in a loan agreement that allows a lender to ask for the balance at any time.Call optionAn option which gives the holder the right but not the obligation to purchase a stated quantity of the underlying instrument (for example shares, indices, commodities etc) at a specified price on or before a given date.Similar MatchesOptions on physicalsOptions on physicalsInterest rate options written on fixed income securities, as opposed to those written on interest rate futures contracts. Index optionsIndex optionsCall or put options on an index such as the Standard and Poor's 500 Index or the FTSE 100 Index.Index options are exercisable into cash rather than the underlying shares in the index. This differentiates them from equity options which are exercisable into the shares to which the option relates.In the USA, index options are traded on a number of exchanges including the New York and Chicago Board Options Exchanges. In the UK, index options are traded on the London International Financial Futures and Options Exchange. (LIFFE) Option agreementOption agreementA form that an options investor opening an option account fills out guarantees the investor will follow trading regulations and has the financial resources to settle possible losses. Put optionPut optionAn option which gives the holder the right but not the obligation to sell shares (or other financial instrument) at a fixed price on or before a given date.Every put option has an exercise price. This is the price at which the holder is entitled to sell the shares to the option writer. If the price of the share falls below the exercise price, the option is said to be 'in the money' and to have an intrinsic value which is equal to the difference between the two.For instance, an option which entitles the holder to sell shares in XYZ at 80p has an intrinsic value of 8p if the price of XYZ's shares falls to 72p.If the price of XYZ's shares rose to 90p, on the other hand, the put option would have no intrinsic value because it would not be in the holder's interests to sell the shares at 80p. The only value which the put option would then have would be its time value. Option to redeemOption to redeemSome stocks, in particular loan notes, give their holders the right to convert the stock into cash at particular times during the stock's life. In the case of loan notes, the opportunity will often occur at the time the interest payments are made which may be half-yearly or quarterly. Holders of stock who want to redeem will know in advance when the dates are, and invariably have to give formal notice to the company in advance of their wish to redeem. Government bonds (gilts) also carry an option to redeem sometimes. Further SuggestionsLockup optionNonqualifying stock option Currency call option Arbitrage free option pricing models Incentive Stock Option (ISO) Bargain purchase price option Garman Kohlhagen option pricing model Split fee option Tax deferral option Option cycle Tax timing option Lapsed option Switching options MONEP (Marche des Options Negociables de Paris) Qualifying stock option European Options Exchange (EOE) option writer Sellers option Virtual currency option Quality option Exotic option Swiss Options and Financial Futures Exchange (SOFFEX) Option premium Indexed Stock Options Option seller |
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