If you buy this option at a low price, it is equivalent to him selling the company's shares to you at a low price, which is a good thing. If you are high, you will not lose money if you don't exercise. The advantage is that you can look at the situation and do it yourself.
Options do not pay dividends. But after you buy your company's shares with options, your shares will pay dividends.
Option refers to a contract, which originated in the American and European markets in the late18th century. This kind of contract gives the holder the right to buy or sell assets at a fixed price on or before a certain date. The key points of option definition are as follows:
The right to choose is a right. An option contract includes at least a buyer and a seller. The holder enjoys rights, but does not assume corresponding obligations.
2. The object of the option. The subject matter of an option refers to the assets you choose to buy or sell. Including stocks, national debt, currency, stock index, commodity futures and so on.
Options are derived from these subject matter, so they are called derivative financial instruments.
It is worth noting that the option seller does not necessarily own the underlying assets. Options can be "short". Option buyers may not really want to buy the underlying asset. Therefore, when the option expires, both parties do not have to make physical delivery of the subject matter, but only need to make up the price according to the price difference.
3. Due date. The expiration date of the option agreed by both parties is called "expiration date", and if the option can only be executed on the expiration date, it is called European option; If an option can be exercised at any time on or before the expiration date, it is called an American option.
4. Execution of options. The act of buying and selling the underlying assets according to the option contract is called "execution". The fixed price agreed in the option contract for the option holder to buy and sell the underlying assets is called the "exercise price".
Option trading began in the American and European markets in the late18th century. Due to the imperfect system and other factors, the development of option trading has been suppressed. In the early 191920s, put option/call option traders were all professional option traders. In the process of trading, they did not quote continuously, but only when the price change was obviously beneficial to them.
This kind of option trading is not universal and easy to transfer, and the liquidity of the market is greatly limited, so this trading system is frustrated. The criticism of the early trading system is not limited to these. Taking XYZ option trading as an example, it is entirely possible that only one trader makes the market, which leads to the excessive bid-ask spread, and as a result, the process of "price discovery"-reaching the agreed price is blocked.
Customers often ask, "How do I know that my order is sold at the best (that is, fair) price?" Concerns about market fairness prevent the market from attracting more participants quickly.