Unit 0.5: Intro To Buying Options

1. Your strike price is a fixed price with PERSON 1 ( The Buyer ) and PERSON 2 ( The Seller )

True

False

True

False

In The Money

Out Of The Money

In the Rhetoric

In The Premium

True

False

Collateral

Shares

Premium

Implied Volatility

Erick's Option Expired WORTHLESS Lost 400$ premium

Ericks Option expired at breakeven (4.00) meaning he didn't lose anything nor gain anything

Ericks Profit is 700$ because the strike price is 8.00$ and 8.00 - 1.00 = 700

Ericks Profit is 300$ because although 8.00 - 1.00 = 700$ he paid (400$)

Erick will lose 200$ at expiration

Erick will be obligated to buy 100 shares at expiration

Yahir pays Erick another 200$ at expiration

Erick will not be obligated to buy 100 shares and he keeps 200$