DQ 2 WEEK 6

Feb 3rd, 2012
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DQ 2 week 6 need good post, reference or citation if needed no plygeris. Pin It Options"Please respond to the following: Analyze the ways in which a call option differs from a put option. Suggest the circumstances under which an investor would use each. Provide an example of instances where each option would be utilized. Determine two (2) advantages that an investment timing option has over other alternatives. Provide two (2) examples that demonstrate the use of an investment timing option in a real-world situation.

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OPTIONSName:Course:College:Tutor:Date:Analyze the ways in which a call option differs from a put option. Suggest the circumstances under which an investor would use each. Provide an example of instances where each option would be utilized.Options give one the right to conduct a transaction of a security at a set predetermined price that is set within a specified period. Even though it is not required in the Call option, one has the right to buy a certain agreed upon quantity of a commodity or product (also referred to as the underlying asset) from the seller within a certain specific set date (the expiry date/period) also set for a certain fixed price which is referred to as the strike price (Morris, & Newman, 2004).On the contrary, a put option gives one the right to sell the commodities or rather the underlying stock at a certain date at a certain predetermined strike price.When purchasing a call option, it is done with only the hope that the underlying stock does not rise above the strike price while a put option is purchased only with the hope that the underlying stock drops significantly below the strike price (Morris, & Newman, 2004).Investors should familiarize themselves with different various strategies before settling on a certain investment. They should learn how options operate before engaging in any investment.A certain stock is trading at $10,000. An investor is sure that the stock will soon advance to $12,000. He then decides to buy a contract o

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