Innovations in Risk Management Option contract: gives the owner the right to buy or sell a fixed number of shares of stock at a specified price over a limited time
Innovations in Risk Management • Option contract: gives the owner the right to buy or sell a fixed number of shares of stock at a specified price over a limited time
Option Contracts Call Option: gives the owner the right to buy a fixed number of shares of stock at a specified price over a limited time If you buy a call option on IBM stock, and the stock price rises enough, you can profit on the call option contract If the stock price does not rise enough, or falls, your call option contract expires worthless
Option Contracts • Call Option: gives the owner the right to buy a fixed number of shares of stock at a specified price over a limited time. • If you buy a call option on IBM stock, and the stock price rises enough, you can profit on the call option contract. • If the stock price does not rise enough, or falls, your call option contract expires worthless