INVESTING: Stock Options checklist (printable)
Stock options are a lesser known investment vehicle. Stock Options have many different features and terms than normal stock.
* Are considered a "derivative instrument" because they derive their value from a base stock
* Stock options have an expiration date, at which point they are no longer valid and lose all value
* The "strike price" is the price at which an option can be executed
* Call Options give the holder a right to purchase a stock at a specific price
* Put Options give the holder a right to sell a stock at a specific price
* Options trade on a stock market just like stock
* Options prices tend to fluctuate much more dramatically than stock
* Options pricing is estimated using the Black Scholes model
* The further away the expiration date is, the more expensive an option will be
* Options trading price is made of time value and intrinsic value
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