Digest | Option Trading
What is Option Trading ? A security giving the right to buy or sell an asset, subject to certain conditions, with a specified period of time. Strike Price 琛屾潈浠凤紱 Premium 鏈熸潈浠凤紱 European Option: Exercisable only on the expiration date. American Option: Can be exercised at any time before the expiration date. When the stock price is much greater than theexercise price, the option is almost sure to be exercised. The current value ofthe option will thus be approximately equal to the price of the stock minusthe price of a pure discount bond that matures on the same date as theoption, with a face value equal to the striking price of the option. ...