A call option is a contract linked to the buyer. For example, the theme of assets is stocks. When buying this option, the buyer thinks that the subject matter will rise in the future, so as to make a profit. Finally, a call option is called the option. Conversely, the same is true of put options, that is, put options are a process of selling options.
Option refers to a contract that gives the holder the right to buy or sell assets at a fixed price on or before a certain date. An option contract includes at least a buyer and a seller. The holder only enjoys rights and does not assume corresponding obligations.
Put option refers to an option that gives the holder the right to sell the underlying assets at a fixed price on or before the maturity date. The characteristic of granting rights is "selling". Therefore, it can also be called "put option", "put option" or "put option".
The essence of call option
1, maturity value The net income of a call option is called the maturity value of the call option, which is equal to the difference between the underlying asset price and the exercise price.
2. Profit and loss The profit and loss of a call option refers to the surplus after deducting the option fee (option price) from the maturity value of the call option.
3. Analysis of influencing factors of mature value
(1) When other conditions remain unchanged, the maturity value of the call option increases with the increase of the underlying asset value;
(2) Under other conditions, the higher the exercise price of the same term option, the lower the maturity value of the call option;
(3) For American options, other things being equal, the longer the maturity time, the higher the maturity value of call options.
Function of call option
One of the important functions of 1. call option is to make option buyers have the right to buy the assets of a specific transaction object at the agreed price in the future, thus improving the overall efficiency of resource allocation.
2. Call options will establish and improve their own constraints and develop their own management mechanism.
3. To a certain extent, it has increased the channels for investors to invest and expanded the scope of investors' choices.
4. The emergence of this option adapts to investors' diversified investment motives, and also meets the trading motives and interest demands. Generally speaking, it provides the possibility for investors in the market to obtain higher returns.
There are some differences between call options and put options, mainly the difference between rights and obligations. First, regardless of the option method, the buyer has only rights but no obligations, and the biggest loss is the commission, but the profit is unlimited. Second, the seller has only obligations but no rights, and the biggest gain is commission, but the risk is unlimited.