When to enforce a call option?
1 answersQuestion asked ( August 15, 2009 , Shopping / Finance )
I have been trading for over a week now. I know the basics but i think i may need some guidance on when i wish to enforce a call option. When do you exercise a call option normally?
Answers to : When to enforce a call option...
Answer
Call option – This is contract between the buyer and the seller of the option. The holder has the right to buy the fixed quantity of underlying instrument (commodity or financial instrument) in the future at a agreed time for the strike price( the price at which the asset is bought / sold when you exercise the option), but no obligation. The seller has the obligation to sell if the buyer decides to buy. The buyer pays fee or premium for this right. This is called as the call option. Generally it is also called as ‘call’.
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