9
Fundamentals of Options
LEARNING OBJECTIVES
After completing this chapter, you will be able to answer the following questions:
- What is an options contract?
- What are call options and put options?
- What is an option premium, exercise price, and exercise date?
- What are American and European options?
- What are the uses of options?
- How to trade options on exchanges and over-the-counter markets?
- What are the protections for corporate actions for exchange-traded options?
In Chapters 3 to 8, we discussed forward contracts, futures contracts, and swap contracts. One of the problems with these contracts is that these contracts will provide gains if the underlying asset price moves against the hedger but they would result in losses when the underlying ...
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