Call and put option at same strike price vs spot

Same at option strike spot and price vs call put

A call option gives its buyer the option to buy an agreed quantity of a commodity or financial instrument, called the underlying asset, from the seller of the option by a certain date (the expiry), for a certain price (the strike price). A put option gives its buyer the right to sell the underlying asset at an agreed-upon strike price before the expiry date.The party that sells the option is called the writer of the option.

The option holder pays the option writer a fee — called the option price or premium. In exchange for this fee, the option writer is obligated to fulfill the terms of the contract, should the option holder choose to exercise the optiIn finance, the strike price (or exercise price) of an option is the fixed price at which the owner of the option can buy (in the case of a call), or sell (in the case of a put), the underlying security or commodity. The strike price may be set by reference to the spot price (market price) of the underlying security or commodity on the day an option is taken out, or it may be fixed at a discount or at a premium.The strike price is a key variable in a derivatives contract between two parties.

The term is mostly used to describe stock and index options in which strike prices are fixed in the contract. There are two main types of derivative products: calls and puts. In practice transaction costs and financing costs (leverage) mean this relationship will not exactly hold, but in liquid markets the relatPut-call parity is an important principle in options pricing first identified by Hans Stoll in his paper, The Relation Between Put and Call Prices, in 199.It states that the premium of a call option implies a certain fair price for thecorresponding put option having the same strike price and expiration date, and viceversa.

Portfolio B consist of a european putDefinition:The strike price is defined as the price at which the holder of an options can buy (in the case of a call option) or sell (in the case of a put option) theunderlying security when the option is exercised. Hence, strike price is also known as exercise price.

Call and put option at same strike price vs spot

Call and put option at same strike price vs spot

Add a comment

Your e-mail will not be published. Required fields are marked *