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Type of Option

Sameer Medhekar (Student) (4140 Points)

22 January 2009

Type of Option

There are two type of options..

1) Call Option

2) Put Option

What are those..??

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Sameer Medhekar (Student) (4140 Points)
Replied 22 January 2009

1. A Call option is the financial obligation between the two parties, the buyer and the seller of this type of option. The buyer of this option has the right but not the obligation to buy an agreed quantity of a particular commodity or financial instrument from the seller of the option at a certain time and a certain price.

2. It is a financial contract between the two parties the buyer and the writer of the option. The put allows the buyer the right but not the obligation to sell a commodity or the financial instrument to the writer of the option at a certain price and time. The writer has the obligation to purchase the underlying asset @ that strike price, if the buyer exercises the option.