Option is a contract between two parties about the future trading right, that is, a kind of future trading right.
The company gives you an option of 654.38 million+,giving you the right to buy shares at a specified price (usually the current market value) in the future.
Whether it is useful or not depends on the future development of the company.
If the company has prospects for development, yes, you can make a profit by choosing the right to exercise;
But if the company does not develop well and the stock price falls, you can give up the exercise without loss.
Extended data:
Option refers to a contract, which originated in the American and European markets in the late18th century. This kind of contract gives the holder the right to buy or sell assets at a fixed price on or before a certain date.
The key points of option definition are as follows:
The right to choose is a right.
An option contract includes at least a buyer and a seller. The holder enjoys rights, but does not assume corresponding obligations.
2. The object of the option. The subject matter of an option refers to the assets you choose to buy or sell.
Including stocks, national debt, currency, stock index, commodity futures and so on.
Options are derived from these subject matter, so they are called derivative financial instruments.
It is worth noting that the option seller does not necessarily own the underlying assets. Options can be "short".
Option buyers may not really want to buy the underlying asset.
Therefore, when the option expires, both parties do not have to make physical delivery of the subject matter, but only need to make up the price according to the price difference.
3. Due date.
The expiration date of the option agreed by both parties is called "expiration date", and if the option can only be executed on the expiration date, it is called European option;
If an option can be exercised at any time on or before the expiration date, it is called an American option.
4. Execution of options.
The act of buying and selling the underlying assets according to the option contract is called "execution".
The fixed price agreed in the option contract for the option holder to buy and sell the underlying assets is called the "exercise price".
Due to the different trading methods, directions and targets of options, many options have been produced. Reasonable classification of options is more conducive to our understanding of option products.
Divide by rights
According to the rights of options, there are two kinds: call options and put options.
According to the types of options, it can be divided into European options and American options.
According to the exercise time, it is divided into three types: European option, American option and Bermuda option.
Options can be divided into call options and put options. The former is also called call option or call option, and the latter is also called put option or put option.
There are four kinds: 1. Long call) 2. Short call) 3. Long play) 4. Short.