Asset-Or-Nothing Put Option

  

Categories: Derivatives, Econ, Stocks

The other side of an asset-or-nothing call option. A put is a bet in the options market that the price of the underlying asset will go down (a call option is a bet that the price will rise). See: Asset-Or-Nothing Call Option

Related or Semi-related Video

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

00:00

Finance allah shmoop what is the intrinsic value of an

00:06

option All right this is brandi She owns a twelve

00:11

dollars strike price call option toe buy a share of

00:15

my fifteen minutes are up dot com a retirement home

00:18

chain for reality tv stars who recently gained self awareness

00:24

Well the stock is trading for fifteen bucks a share

00:26

of this moment Her strike price is twelve so the

00:30

intrinsic value of that option is fifteen minutes twelve or

00:34

three bucks that is it is three dollars in the

00:38

money and if brandy converted it into a share this

00:41

moment and then immediately sold the stock for fifteen dollars

00:44

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

00:47

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

00:52

that three dollars in the money is actually worth more

00:54

than three dollars because she has data or time yet

00:59

to exercise and convert or just sell the option itself

01:03

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

01:06

up from fifteen dollars in overtime Stocks go up so

01:09

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

01:11

dime twenty cents twenty five cents and make that three

01:14

Dollars worth three ten three twenty three Twenty five Sure

01:17

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

01:20

actual value and intrinsic value You get seita kickers in

01:24

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

01:28

into stock and selling them right there And yeah it

01:30

looks like our one and a half minutes are up

Up Next

Finance: What Is a Put Option?
83 Views

What is a put option? A put option is a type of contract that lets the investor sell shares of a stock at a certain price and within a window of ti...

Finance: What Is a Call Option?
25 Views

What is a call option? A call option is a type of contract that lets the investor buy shares of a stock at a certain price and within a window of t...

Finance: What is a greenshoe option?
15 Views

What is a greenshoe option? When Morgan Stanley launched Facebook’s IPO, they had humongous demand. The demand was so great that Morgan Stanley t...

Finance: What's the Difference Between an American and European Style Option?
13 Views

What is the difference between an American and European style option? The main difference between American and European options is when they can be...

Find other enlightening terms in Shmoop Finance Genius Bar(f)