The trader selling a call has an obligation to sell the stock to the call buyer at a fixed price strike price. Retrieved March 15, 2017. There are two more types of options; covered and naked. See also edit References edit Abraham, Stephan (May 13, 2010). In other words, you must win.5 of the time just to break even".
A trader who expects a stock's price to increase can buy a call option to purchase the stock at a fixed price strike price at a later date, rather than purchase the stock e cash outlay on the option is the premium.
The trader would have no obligation to buy the stock, but only has the right to do so at or before the expiration date.
What is a 'Spread' A spread is the difference between the bid and the ask price of a security or asset.
It can also refer to an options position established by purchasing one option and selling.
Thomson Southwestern, Chapter 23 Black, Fischer and Myron. 34 Cyprus edit On May 3, 2012, the Cyprus Securities and Exchange Commission (CySEC) announced a policy change regarding the classification of binary options as financial instruments. In general, the option writer is a well-capitalized institution (in order to prevent the credit risk). Trading activity and academic interest has increased since then. 24 Pape observed that binary options are poor from a gambling standpoint as well because of the excessive "house edge". "Is this the end for binary options, the world's worst financial product?".
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