SMIF Chapter 14

option

gives the holder the right to buy or sell an underlying asset at a fixed price over a limited period of time

strike price

the fixed price the holder is allowed to buy or sell an underlying stock price at

derivative securities

securities that derive their value from the price of some other underlying asset

option premium

the price than an investor pays to buy an option

option writer

the individual that sells the option in the market, so they are entitled to receive the price paid

expiration date

specifies the life of the option, just as the maturity date indicates the life of a bond; specifies the length of the contract between the holder and the writer of the option

option chain

a listing of all options on an underlying asset for a give expiration period

intrinsic value

represents the gross amount of money than an investor would receive if he chose to exercise a call option

option

gives the holder the right to buy or sell an underlying asset at a fixed price over a limited period of time

strike price

the fixed price the holder is allowed to buy or sell an underlying stock price at

derivative securities

securities that derive their value from the price of some other underlying asset

option premium

the price than an investor pays to buy an option

option writer

the individual that sells the option in the market, so they are entitled to receive the price paid

expiration date

specifies the life of the option, just as the maturity date indicates the life of a bond; specifies the length of the contract between the holder and the writer of the option

option chain

a listing of all options on an underlying asset for a give expiration period

intrinsic value

represents the gross amount of money than an investor would receive if he chose to exercise a call option