Dealing in Exchange: Buying a Call Option

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Dealing in exchange Buying a call option This is a contract in which the buyer, otherwise referred to as the holder has the right, though not obligated , to buy a given specific quantity of security at the strike price or specified price within a specified period of time or until the expiration. On the other hand for the seller or the writer, call option represents the obligation to sell the security in question at the strike price once the call option writer is given a premium for him to agree to take the risk associated with the obligation. This means the person buying can change his mind within the given period but the seller cannot possibly change his mind (The Options Guide, 2009). The holders often place a buy call option and pay the premium with the hope and faith that the price of the shares of that given company will appreciate. Selling a call option Here, there is the complement of the buying a call option portrayed. When the holder goes to identify the call and pays a premium, there is that individual who must be on the other side of the table making the offer. Therefore, the seller of the call receives the premium and may be forced to sell the call at the strike price within the specified period of time. This act is also referred to as witting a call option. It comes I two parts; if the seller of the call owns the underlying stock then this is referred to as "writing a covered call". In the case where the writer does not own the stock then it is referred
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