Stock Hedging

There are two types of stock options. The first type is a put option, which provides the holder with a right to sell 100 shares of a stipulated publicly traded common stock over a specified period of time. The second type is a call option, which provides the holder with a right to buy 100 shares of a stipulated publicly traded common stock over a specified period of time. The specified times are typically nine-months or less.

In addition to the definitions of put options and call options, there are four other relevant terms associated with stock options contracts. These four terms are as follows:

1. European option. A European option is one which can be exercised only on its maturity date, and on which there are no cash dividends paid on the underlying common stock.

. . .
Some common words found in the essay are:
Hedge Question, stock price, gross gain, call option, minimum profit, contingent claim, option contract, common stock, cost shares $12000, cover cost option, , 100 shares stipulated, profit $8850, stipulated publicly traded, specified option, option question, shares stipulated publicly,
Approximate Word count = 574
Approximate Pages = 2 (250 words per page)

More Essays on Stock Hedging