Week 9 Flashcards
The right to buy an asset at a specified exercise price on or before a specified expiration date.
Call Option
Price set for calling (buying) an asset or putting (selling) an asset.
exercise or strike price
Purchase price of an option.
premium
The right to sell an asset at a specified exercise price on or before a specified expiration date.
put option
An option where exercise would generate a positive cash flow.
in the money
An option that, if exercised, would produce a negative cash flow. Out-of-the-money options are therefore never exercised.
out of the money
An option where the exercise price equals the asset price.
at the money
Can be exercised on or before its expiration
American option
Can be exercised only at expiration.
European option
The _____ is from the perspective of a buyer is a bet that the stock will end up below the strike price.
Put
