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Conversely, option buyers want to buy when less volatility is baked into the option price, to get a better deal. So if a stock becomes less volatile, the option will decline in value to reflect ...
Options come in two major varieties, and buyers make a cash payment called a premium to own an option contract: Call options allow the owner to buy the underlying stock at a specified price until ...
Overall, it's a good option for investors looking for monthly income and those worried about the stock market's downside risk. Whirlpool (dividend yield of 7.5%)
For a put option, the option is in-the-money if the strike price is higher than the underlying spot price; then the intrinsic value is the strike price minus the underlying spot price. Otherwise the intrinsic value is zero. For example, when a DJI call (bullish/long) option is 18,000 and the underlying DJI Index is priced at $18,050 then there ...
Rainbow options refer to all options whose payoff depends on more than one underlying risky asset; each asset is referred to as a color of the rainbow. [3] Examples of these include: [7] Put 2 and call 1, an exchange option to put a predefined risky asset and call the other risky asset. Thus, asset 1 is called with the 'strike' being asset 2.
A stock index option provides the right to trade a specific stock index at a specified price by a specified expiration date. A call option on a stock index gives you the right to buy the index, and a put option on a stock index gives you the right to sell the index. Options on stock indexes are similar to exchange-traded funds (ETFs), the ...
The ETF's yield is an attractive 4.6%, which is much higher than the 1.3% or so for the S&P 500 today. If there's some modest portfolio growth along with that income, that's icing on the cake. The ...
Naked Put Potential Return = (put option price) / (stock strike price - put option price) For example, for a put option sold for $2 with a strike price of $50 against stock LMN the potential return for the naked put would be: Naked Put Potential Return = 2/ (50.0-2)= 4.2%. The break-even point is the stock strike price minus the put option price.