Share
Explore BrainMass

Call Options.

How is a call option's price related to the underlying stock price at expiration date? How about a put option's price?Z

Solution Preview

How is a call option's price related to the underlying stock price at expiration date? How about a put option's price?

Please provide examples.

Thank you.
An option is the right, but not the obligation, to buy or sell a stock (or other security) for a specified price on or before a specific date. (Distancelearning)
Apart from risk containment, options can be used for speculation and investors can create a wide range of potential profit scenarios.
The price of an option is called the premium. An option's premium is determined by a number of factors including the current price of the underlying asset, the strike price of the option, the time remaining until expiration, and volatility. ...

Solution Summary

The solution discusses call option's prices related to the underlying stock price at expiration date.

$2.19