What are the options? Options are financial instruments that ensure the possibility of selling or buying an asset at a certain price in the future, unlike futures, options may not be executed since there is no obligation for the purchasing party to make them effective.
What types exist? There are 4 types of operations;
-Buy a call option: Pay an amount (premium) in exchange for an investor to ensure that at the term operated you will be able to buy the chosen asset at a certain price regardless of whether it goes up or down, it is usually used when it is considered that the the price of the asset is low, but the funds are not available to buy it at present.
-Buy a put option: Pay a premium in exchange for another investor offering to sell the chosen asset at the specified price at the traded term, it is usually used when there is an asset that is considered to fall in price in the future but is He prefers to keep it in his portfolio in case it doesn’t happen.
-Sell a purchase option: Receive the premium money in exchange for assuring the other investor that you are going to buy an amount of a certain asset at a specific price in the future, it is used for situations where the other investor believes You will not exercise the option because the market price will be lower than the agreed price and you will earn the amount of the premium for taking the risk.
-Sell a put option: Receive the premium money in exchange for assuring another investor to buy their securities in the future at a certain price, it is used when one believes that the market price will be higher than the one agreed upon by the investor. You will not exercise the option and you will earn the premium amount for taking the risk.
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Information provided by NYSE