Call Option

Call Option What is the definition of an option? An option is a contract that gives the holder the right to buy shares at a specified price. If a person is bullish on the population (the population is expected to increase) in short term, that person may buy an option. Option contracts to the buyer of risk or holder. If the option is not viable, the investor could lose all the money paid by the contract. Spend the prize money. The premium is the market price of the option, which will change the market for stocks. If the market rises after a purchase option, the first and the investor will pay. The customer can trade is the opportunity to go back on the market for a profit or you can exercise the option (for the purchase of securities in the option price and then sell it at a time when the market price). The call options trading most investors the opportunity to trade for the prize against the loss or gain for the exercise of options. If the option to purchase $ 300 market and the population increases, the investor can sell the call option to retu on the market for a profit, increasing the premium. Options carry a risk of a single risk factor. Unlike the securities owned, the options expire after a certain period. Standard finishing options with a monthly maximum of 9 months. A person has the option has a duration of 2 months from the month of purchase, only that the amount of time to close the position - hopefully at a profit. If the position remained open until the due date the option expires worthless. The maximum loss of an owner of an option is the premium paid. Since the potential benefits of a benefit option is based on the increase of stock, the profit potential is unlimited. The holder has the right to acquire shares at a price (strike price), so if the stock market is 10 points higher than its exercise price when the contract, you can make 10 points - less than the premium paid. If the market is 30 points higher, you can get 30 points, less the price and so on. There is no limit to the benefit. Coverage and security options can be used as protection for the existing posts. If you sold stocks short, a long option can be used to protect this position. The sale must be in the short term, hoping for a lower price than the short sale - that is the way to make money in short sales. The potential loss in case of sale of stock short is unlimited (if the position is not protected). The stock could reach an unlimited number, and may be forced to buy the shares at an inflated price, with a consequent loss. An option allows investors to buy stocks of a fixed price. It has an option against his short protects you. The downside is that the premium paid for the option to injure your profit by selling short. Some options investors calls short "sales calls" or "short call". The goal is here is the option expiry. People who call options short of collecting the premiums (as opposed to buyers who pay the premium), so if the option expires - the seller will have to ea money. The risk is huge, if the option is not covered (you own shares). If the option is left uncovered or "naked", and the seller may sustain losses indefinitely. The seller or "writer" of options is required to provide the people to call the owner the price if the option is exercised. If the writing does not own shares perform this obligation, must go to the market. If the market is significantly higher than the price, you lose the difference. The calls covered more conservative call to participate in short, has much to do with the positions of the stock. If a person owns shares at a price, he or she can call the option to short the same stock. This allows the person to make the award in order to reduce its cost. It also covers the same option, so if the option is exercised - the inverter can supply their own equipment and do not have to buy 100 new shares in the market. Only seasoned investors should participate in options trading. Talk to your broker or adviser to see whether they are right for you. "Baby Steps" is the key to start, but once you know the way around, it can be very profitable situations. m / calloption.htm Good luck!