Asset-Or-Nothing Call Option

  

Categories: Derivatives, Econ, Stocks

A commodities option. To put it simply, you get a certain amount of green stuff. Or you get nothing. At the expiration date of the option, you can’t exercise it unless the price of the underlying commodity has reached the strike price.  Example: You have a right to buy May corn at $3.80 and May corn trades for $3.79 at the expiration time. Your option is worthless.

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Finance: What is Intrinsic Value (of An ...6 Views

00:00

Finance allah shmoop what is the intrinsic value of an

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option All right this is brandi She owns a twelve

00:11

dollars strike price call option toe buy a share of

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my fifteen minutes are up dot com a retirement home

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chain for reality tv stars who recently gained self awareness

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Well the stock is trading for fifteen bucks a share

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of this moment Her strike price is twelve so the

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intrinsic value of that option is fifteen minutes twelve or

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three bucks that is it is three dollars in the

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money and if brandy converted it into a share this

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moment and then immediately sold the stock for fifteen dollars

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in cash well she'd make three bucks But there's a

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catch per call option doesn't expire for five weeks so

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that three dollars in the money is actually worth more

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than three dollars because she has data or time yet

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to exercise and convert or just sell the option itself

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So it's worth mohr because well a stock might go

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up from fifteen dollars in overtime Stocks go up so

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in the next five weeks well couldn't go up a

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dime twenty cents twenty five cents and make that three

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Dollars worth three ten three twenty three Twenty five Sure

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sure it could happen So yeah that's The difference between

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actual value and intrinsic value You get seita kickers in

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there making the option's worth more than just converting them

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into stock and selling them right there And yeah it

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looks like our one and a half minutes are up

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