Accounting for Call Option and Put Option
Call Option is the futures contract that the buyer has the right to buy and seller has obligation to sell assets at a specific price. It means that the buyer may or may not buy the assets in the 什麼是股票選擇權 Call and Put future as the market price drop below the contract price. However, the seller does not have the option but has obligation to sell even the market price increase higher than the contract price.
It sounds good for the buyer, but in order to sign this contract, the buyer must pay a premium. It is the amount that the buyer can lose when they decide not to exercise the contract. And it is the amount the seller receives in exchange for secure the price for buyers.
The call option can 什麼是股票選擇權 Call and Put be used to buy and sell stock, bonds, commodity which is considered as the underlying assets.
Call Option Feature
- The buyer can exercise the option before the expiration date
- Agreed price in the contract is known as “Strike Price”
- The seller expect the share price to decrease below the strike price so that buyer will not exercise the contract and seller can get the premium.
- The buyer expects the share price to increase above the strike so that they can purchase at a lower price and make a profit.
- The maximum loss of the buyer is the premium while 什麼是股票選擇權 Call and Put the profit is unlimited.
- The maximum profit of the seller is the premium while the loss is unlimited.
- Buyer’s profit is the seller’s loss.
Gain/Loss on Call Option
- Gain for buyer when market price more than the exercise price
- Gain for seller when market price less than the exercise price
Call Option Example
Mr. A purchases a call option from company ABC which allows him to purchase the share at $ 1,000 per share and it will expire within 3 rd year. Mr. A paid a call premium of $ 10 per share and he purchases 2,000 shares.
- Purchasing date
- At the end of 1 st year, share price is $ 1,008
- At the end of 2 nd year, share price is 1,015
- On the purchasing date, Mr. A paid $ 20,000 to company ABC. The fair value of the call option contract equals $ 20,000.
Company ABC will make the following journal entry
(1,008 * 2,000) 什麼是股票選擇權 Call and Put – [20,000 + (1,000*2,000)] = 2,016,000 – 2,020,000 = $ 4,000
At the end of 2 nd year, share price equal to 1015 per share.
(1,015 * 2,000) – [20,000 + (1,000*2,000)] = 2,030,000 – 2,020,000 = ($ 10,000)
It means the buyer will 什麼是股票選擇權 Call and Put gain $ 10,000 if he exercises the option and the seller loss $ 10,000
Put Option is the futures contract that gives the right to the holder to sell the underlying asset at a specific price within a time period. Opposite from call option, put option protects the holder from a share price decrease. Both seller and buyer make a contract to sell the stock at an agreed price (strike price). However, the holder has the option to sell while the buyer has the obligation to purchase. So the holder is the one who decides if the transaction happens or not.
When the share price decrease below the strike price, holder can 什麼是股票選擇權 Call and Put go to the issuer to exercise the put option. It means the holder will force the issuer to buy the share at strike price while the market price is lower. However, if the share does not drop below strike price, the holder will not execute the option, but they have to pay the premium to issuer.
Options Trading – Calls And Puts A Call” Is Equivalent To A Long Position And A Put” Is Similar To A Short Position
Options trading signals are a must, So in case you are a dealer on the options trading marketplace with a few expertise already. Whenever trading options can be somewhat daunting because of the lingo and perceived 什麼是股票選擇權 Call and Put sophistication, for new investors.
As you will see, I know it’s quite simple and can be an effective tactic for speculation or hedging one’s position.
We’ve got plenty of basics of options trading. Not obligation, to purchase an underlying security at a certain price in the future, an option is the right. Actually a call is equivalent to a long position and a put is similar to a short position.
Mostly there’re two basic options.
The current analytical data suggest the current odds of that happening are 58.
Should the contract expire worthless, the premium should represent a 97percentage return on the cash commitment, or 18 dot 68 annualized at Stock Options Channel we 什麼是股票選擇權 Call and Put call this the YieldBoost, as long as the $ 77 dot 50 strike represents an approximate 2 discount to the current trading price of the stock. This Start Trading with the Best Binary Options Broker might be a good solution for you. Whenever publishing a chart of those numbers on our website under the contract detail page for this contract, stock Options Channel will track those odds over time to see how they change. Whenever putting the cost basis of the shares at $ 75 dot 20, the put contract at the $ 77 dot 50 strike price has a current bid of $ If an investor was to ‘selltoopen’ that put contract, they are committing to purchase the stock at $ 77 dot 50, will also collect the premium.
That could represent an attractive alternative to paying $ 78 dot 98/share today, in order to an investor already interested in purchasing shares of KLAC.
With the $ 80 dot 00 strike highlighted in redish, below is a chart showing KLAC’s trailing twelve month trading history.
On p of studying the business fundamentals becomes important, lots of upside could potentially be left on the table if KLAC shares really soar, that is why looking at the trailing twelve month trading history for KLATencor Corp.. Turning to the calls side of the option chain, the call contract at the $ 80 dot 00 strike price has a current bid of $ If an investor 什麼是股票選擇權 Call and Put was to purchase shares of KLAC stock at the current price degree 什麼是股票選擇權 Call and Put of $ 78 dot 98/share, and later ‘sell to open’ that call contract as a covered call, they are committing to sell the stock at $ 什麼是股票選擇權 Call and Put 80.Considering the call seller will also collect the premium, that should drive 什麼是股票選擇權 Call and Put a tal return of 08 if the stock gets called away at the February 2017 expiration.
Calls vs Puts in Options Trading Explained: The Ultimate Guide
The first step in any beginner options trader education is understanding the fundamental difference between calls and puts.
In the stock market, there are only two types of options in existence: calls and puts. You can combine these options in numerous ways, creating strategies like the “vertical spread”, “iron condor” and “butterfly”.
Just like stocks, you can both buy and sell options. This article, however, is going to focus mostly on the differences (and similarities) between the basic long call and put options strategy.
Should you want to continue your education, we have provided a few links to more advanced options trading lessons at the end of this article.
If you are brand new to options, perhaps a better starting place would be comparing stock to options.
Calls increase in value when the underlying stock rises and are thus bullish