Sentences with phrase «buy shares of the underlying stock»

For put options, it is the converse, where the options holder may demand that the options seller buy shares of the underlying stock at the strike price.

A call option gives its owner the right to buy shares of the underlying stock at the strike price.

While not as common as call options (when the owner is reserving the right to buy shares of an underlying stock), put options can be just as profitable.

But when you buy into a mutual - fund, the mutual - fund «suddenly has more shares» — it takes your money and uses it to buy shares of the underlying stocks (in a ratio equal to its current holdings).

Not exact matches

If a stock price is somehow chronically low in relation to the fundamentals of the underlying business, buying 100 % of the outstanding shares removes the veil, and closes the gap between price and value.

When you sell a covered call, also known as writing a call, you already own shares of the underlying stock and you are selling someone the right, but not the obligation, to buy that stock at a set price until the option expires — and the price won't change no matter which way the market goes.1 If you didn't own the stock, it would be known as a naked call — a much riskier proposition.

And because you're collecting immediate income, you're lowering your cost basis on the shares you're buying, which means this strategy is actually safer than purchasing shares of the underlying stock outright.

Listed stock options contracts control the right to buy or sell 100 shares of the underlying stock.

For example, a trader anticipates that the share price of IBM is about to go up in the near future, he buys the stock futures of IBM at the underlying price.

So, if you exercise a call, you're buying 100 shares of the underlying stock; if you exercise a put, you are selling the underlying 100 shares at a stated price — known as the «strike price.»

With ETFs, for example, following the dictates of supply and demand, they buy the component stock to assemble new shares, or dismantle shares to sell the underlying stock.

The seller of a call option, also referred to as a writer, is obligated to sell the shares of the underlying stock at the strike price if a buyer decides to exercise the option to buy the stock.

And because you're collecting immediate income when you open the trade, you're lowering your cost basis on the shares you're buying, which means this strategy is actually safer than purchasing shares of the underlying stock outright.

Place a trade using your brokers option trading screen to buy one of the selected put options for each 100 shares of the underlying stock you own.

If you buy five contracts, you have the right to buy 500 shares of the underlying stock.

You must then buy the 100 shares of the underlying stock at the strike price.