SHARETIPSINFO >> Articles Directory >>All about stock options and stock future, Related to Stock market
Everyone of us are aware of and are also very familiar with the terms like stocks, shares, stock market, share markets, etc. as these words have become the most frequently used words in the present day world. Especially after the advent of liberalization policies, these words have become an integral part of our day to day life. It is so because, after the liberalization, all the stringent and severe economic policies have been loosen up and made flexible to some extent. As a result of these loosening up of economic policies and making them more or less flexible, the concept of stocks and shares are now gradually gaining ground. Since the stock market is gaining ground and people are now being aware of its functions and operations, the very many aspects of the stock market is now coming in to light. One such aspect of the stock market is the stock options. Very few people must have heard about the stock options and as such very few people must have used it as well. Since it is a new term for some and is beneficial for us, as investors, we start learning the A to Z of stock options.
Benefits and advantages
Stock options are not new terms; they have always been an essential part of the stock market, only that they have come into prominence only recently. This is mainly because we human beings are always a little apprehensive to try something new. As such, the stock options too were always neglected and as such, it never gained importance. Now that its benefits and advantages are known to all, everyone is willing to invest in the stock options in the present day. As they say, it is better late than never, so it is perfectly fine if we start learning about the stock options now onwards. But before we learn the more complex things about the stock options, let us just have an overview of what stock options are.
Rights of a buyer
Generally, the term stock option (also known as call option) refers to a class or rather a type of option. In normal sense by option, we refer to a choice or an alternative or may be a preference. However, in this article by option we mean the rights of a buyer. Thus, in other words, the term stock option refers to the rights of the buyer, which comes without any obligation on the part of the buyer. That is, in other words the buyer is free from all types of obligations or responsibility. These options are generally found to be in the form of a contract between the buyers and sellers. Generally, the buyers are the ones who benefit the most out of these options. In fact, these are designed in a way that they suit the online stock market buyer. It provides the buyer with certain rights but without making the obligation inherent on these rights. The rights conferred upon by the stock options are such that they make it possible for the buyer either to buy or to sell parts or the whole of the specific assets.
Should not overlook another condition
However, these rights of the buyer are subject to the stock conditions that state that the buyer must sell the specific assets within the time specified in the option. In other words, the right of the buyer either to sell or to buy the assets is applicable only if the right is exercised either on the date on which the contract or the option expires or before the date. As such, the buyer must try to exercise the right within this option or contract period. Again, the buyer should not overlook another condition. This condition is that the buyer can sell or buy the specific assets only at the agreed price. This agreed price is known as the strike price or the option price. Thus, this condition implies that the buyer cannot charge any price that he likes from their customers in the case when they sell the specific assets under the option or contract. The prices of these options are pre determined and are acceptable by all. Thus, we should learn the A to Z of stock options.
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