sark_anZas
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One option contract is worth 100 stock. So if I buy a 135 put option with a strike price of 2.15, then I pay 2.15*100?
If that I exercise that option at 135, do i effectively hold 100 shares at 135 or 100 *contracts* at 1.35? Logic points to contracts. For example a 135 put at 2.15 would give me the right to buy stock at a profit of(2.15-1.35)*100)=$80 (38%). Is this right?
Can someone tell me what I'm missing here?
Even this doesn't seem right when I consider other factors that move the prices of options.
For example, Vega.
If the profit I get upon exercising before expiration is dependent on the price of the option, does that mean that a rise in volatility will postitively influence a call, while negatively influencing a put?
I haven't researched the greeks and how the function yet. I'll do that tonight.
thanks in advance
If that I exercise that option at 135, do i effectively hold 100 shares at 135 or 100 *contracts* at 1.35? Logic points to contracts. For example a 135 put at 2.15 would give me the right to buy stock at a profit of(2.15-1.35)*100)=$80 (38%). Is this right?
Can someone tell me what I'm missing here?
Even this doesn't seem right when I consider other factors that move the prices of options.
For example, Vega.
If the profit I get upon exercising before expiration is dependent on the price of the option, does that mean that a rise in volatility will postitively influence a call, while negatively influencing a put?
I haven't researched the greeks and how the function yet. I'll do that tonight.
thanks in advance