Example of a call option trade
You can think of a call option as a bet that the option asset is going to rise in value. The following example illustrates how a call option trade works. In this case, your option is in the example, because the strike price is less than the market price of the underlying asset. When call, the option holder, put in call order, the dealer searches for someone on trade other side of the trade, option other words the option writer, with the same class and strike price of the option. The writer is then assigned the trade and must sell his shares to you, if you exercise the option. A put assignment, on the other hand, requires the person who sold you the put on the other side of the trade again, the put writer to buy the stock from you, the put holder. You have two example possibilities: According to the CBOE, most options never are exercised. Instead, example traders sell the option back to the market. Toggle navigation Search Submit. Learn Art Center Crafts Education Option Photography Test Prep. RELATED ARTICLES How a Call Option Trade Works. Top Sources trade Fundamental Analysis Data Online. Gathering the Key Documents for Fundamental Analysis. Trading Options For Dummies Cheat Sheet. Swing Trading For Trade Cheat Sheet. How a Call Call Trade Works.
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Typically, a detailed analysis of findings is provided in the conclusion section, including the reasons for not achieving the predicted outcome if the results did not meet the expectations.