Sir ive started reading the material and all abd watching your lectures which are really interesting,
One thing i dont get sir is that , how can we buy a put option without having already purchased the particular companies shares for which we are going to get the put options for?
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Option pricing
And sir these options are for companies shares , so are they traded in stock market just like shar es ? And options used for example in hedging for currency are traded there along side?
9y ago#2It is no problem buying a put option when you don't have the shares.
It gives you the right to sell a share at a fixed price on a future date. When the date arrives, if you want to exercise the option then you buy a share on that day and immediately sell it at the fixed price.
Share options are traded on the stock exchange.
Currency options are traded on the currency markets.
Thanks a bunch it clarified alot of things so its basically used to make a profit,
What about selling the put option just like we can sell a call option, is that possible too?
And is there any difference between currency options and share options apart from the underlying item?
And must thank u sir for your replies
9y ago#5There is no difference in the principle.
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