The price of an options is called its premium. The buyer of an option cannot lose more than the initial premium paid for the contract, no matter what happens to the underlying security. So, the risk to the buyer is never more than the amount paid for the option. The profit potential, on the other hand, is theoretically unlimited.options trading give a way to understand as well as to select a right premium. In return for the premium received from the buyer, the seller of an option assumes the risk of having to deliver (if a call option) or taking delivery (if a put option) of the shares of the stock. Unless that option optiontips.in is covered by another option or a position in the underlying stock, the seller's loss can be open-ended, meaning the seller can lose much more than the original premium received.
optiontips.in awared you that there are two basic styles of options: American and European. An American, or American-style, option can be exercised at any time between the date of purchase and the expiration date.Stock Tips give all these awareness as well as premium facility. Most exchange-traded options are American style and all stock options are American style. A European, or European-style, option can only be exercised on the expiration date. Many index options are European style.
When the strike price of a call option is above the current price of the stock, according to optiontips.in the call is out of the money and when the strike price is below the stock price it is in the money. Put options are the exact opposite, being out of the money when the strike price is below the stock price, and in the money when the strike price is above the stock price.
