Blossary – Options and Corporate Finance

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Option is basically a right that is given to the holder of where he can buy or sell an asset at a predetermined price at a predetermined date. Must be noted that it is just a right and not an obligation.

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short straddle strategy

Short straddle strategy is basically the use of a combination of options to build a complex contract that has the ability to bring down the total risk that is attached to the transaction. It is done ...

long straddle strategy

Protective put strategy is basically the use of a combination of options to build a complex contract that has the ability to bring down the total risk that is attached to the transaction. It is done ...

covered call strategy

Covered call strategy is basically the use of a combination of options to build a complex contract that has the ability to bring down the total risk that is attached to the transaction. It is done by ...

protective put strategy

intrinsic value of option

Intrinsic value of the option basically calculates how valuable the option is to the option holder. This value is calculated by figuring out the difference between the exercise price of the option ...

out of the money option

An option is considered as in the money when the option holder has the potential to make a loss by exercising it at the exercise price. This will usually be the case when the exercise price of the ...

at the money option

An option is considered as at the money when the option holder has the potential to break even by exercising it at the exercise price. This will usually be the case when the exercise price of the ...