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The Value Of The Price Of Stock

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Introduction

Benefit
• To insure if the price of stock are going to rise or fall
• Less cost because its much cheaper than buying directly at the current price market
• The maximum loss is the money paid for the premium
• The holders can participate in the movement of the stock at the fraction of the usual price
• Potential to leverage or gear up the investment in which way increases both his potential profits and losses.
•
Option
An option is a contract that gives buyer the right or option to either buy or sale underlying asset at the particular price on or before the expiration date. The underlying asset can be any type of investment with unsustainable price such as stock, bond, property, currency, commodity, and so on.
Options are classified according to the way in which they can be exercised. United States-style warrant used by many countries can be exercised at any time up to the expiry date. In contrast, in Europe option can only be exercised on the exact expiry date itself.
Options are not a binding contract and generally cost less money, less risk, capping losses to a maximum amount than buy directly at the market price. It is most often used in the context of stock and share, which is volatile. Commonly, options are traded between investors in financial market called option exchange without any involvement from the underlined company.
Option works like insurance to insure the investors’ investment. It is one of the financial instruments that can

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