...Securities 12-1 INTRODUCTION An option gives the owner (buyer of the option = long the option) the right, but not the obligation, to buy (call option) or to sell (put option) a defined asset, at a specified price (exercise price or strike price), at a future date or within...

...different assets. For background on futures, forwards, and swaps, see Hull (1997). An option contract gives the holder the right but not the obligation to buy...contract pays an option price to the option writer. Option-pricing analysis, most often employing the Black-Scholes formula, serves to set the option price....

...up a stock market index, rather than shares in an individual company. A stock index option gives its holder the right, but not the obligation, to buy (call option) or sell (put option) a notional portfolio of shares at a price represented by a 30 stock index value....

...of preferred stock are discussed in detail in Chapter 6. Derivative Securities -e 18 CHAPTER 1 that give the holder the right but not the obligation to buy (call option) or sell (put option) a specified financial asset at a specified price within a given period of time. Financial...

...not physically delivered.45 2.2.2.2. Options By signing (buying) an option, the owner is given the right but not the obligation, to buy (call option) or to sell (put option) a stated number of the underlying asset at a 3 See Rudolph, B., Schafer, K. (2005), p. 56. 4 See Rudolph,...

...and debt. Still other instruments confer rights but not obligations. Options are one such instrument. Option contracts give the holder the right, but not the obligation, to buy or sell an asset at a set price within a set time frame. They are extremely flexible instruments...