Which of the following elements are required for a contract to be legally binding and enforceable?
An agreement between private parties creating mutual obligations enforceable by law. The basic elements required for the agreement to be a legally enforceable contract are: mutual assent, expressed by a valid offer and acceptance; adequate consideration; capacity; and legality.
What is the relationship between orientation and socialization activities?
What is the relationship between orientation and socialization activities? A. Orientation covers job content, socialization covers social content.
Which of the following circumstances makes it less likely an oral statement about weekend work?
Which of the following circumstances makes it less likely an oral statement about weekend work would be legally enforceable as a contract term? The statement is not supported by a written policy.
Is a right to purchase a share of stock for a predetermined price at a later date?
call option
What is difference between call option and put option?
A Call Option gives the buyer the right, but not the obligation to buy the underlying security at the exercise price, at or within a specified time. A Put Option gives the buyer the right, but not the obligation to sell the underlying security at the exercise price, at or within a specified time.
Can you sell a call option before it hits the strike price?
Yes, you are able to sell the put option before it hits the strike price but it won’t necessarily be for profit.
What happens when a call hits strike price?
What Happens When Long Calls Hit A Strike Price? If you’re in the long call position, you want the market price to be higher until the expiration date. When the strike price is reached, your contract is essentially worthless on the expiration date (since you can purchase the shares on the open market for that price).
What if I don’t have the money to exercise a call option?
A better reason to exercise a call would be to obtain the shares as a longer term investment, but if you do not have the money to pay for the shares, that is not an option. If you choose to sell, you can sell your call options at any time until the market closes on the expiration Friday.
When should you sell an option call?
You sell call option when you expect that the upsides for the stock are limited. You are indifferent to whether the stock is stable or goes down as long as the stock does not go above the strike price.
What happens if you sell an option early?
Most traders do not use early exercise for options they hold. Traders will take profits by selling their options and closing the trade. The more time there is before expiration, the greater the time value that remains in the option. Exercising that option results in an automatic loss of that time value.
How long should I hold an option?
Typically, you don’t want to buy an option with six to nine months remaining if you only plan on being in the trade for a couple of weeks, since the options will be more expensive and you will lose some leverage. One thing to be aware of is that the time premium of options decays more rapidly in the last 30 days.
Are puts or calls riskier?
Puts are more expensive than calls, so you have to pay more (i.e. take greater risk) buying puts. But generally volatility will increase as markets move lower, so your puts will go up in value. I wouldn’t call one riskier than the other though; the risk is just the premium you pay per delta.
What is the best stock option strategy?
1. The long put. The long put is an options strategy where the trader buys a put expecting the stock to be below the strike price before expiration. Best to use when: The long put is a useful strategy when you expect the stock to decline and you want to earn a large upside.
Which is better buying or selling options?
The vast majority of option buyers lose money. For new option traders, the thought of making only a few hundred dollars on a trade selling options is a lot less appealing. The thing is the probability, and the volatility risk premium is far more in your favor when selling options.
Do Option sellers make more money?
Selling options is a positive theta trade, meaning the position will earn more money as time decay accelerates. As the option’s premium declines, the seller of the option can close out their position with an offsetting trade by buying back the option at a much cheaper premium.
How much money do you need to sell options?
The average size of a recommended trade is about $6,000, and they range from $4,000 to $10,000. Because you have to buy at least 100 shares, or have cash set aside with your broker to buy it in the case of selling puts, you’re looking at committing at least $5,000 to any stock that trades for $50 per share and above.
How much margin do I need to sell puts?
20%
What happens if my call option expires in the money?
You buy call options to make money when the stock price rises. If your call options expire in the money, you end up paying a higher price to purchase the stock than what you would have paid if you had bought the stock outright. You are also out the commission you paid to buy the option and the option’s premium cost.