I am new to options trading. I've watched videos, read articles, had people whiteboard to me, but I'm somehow not able grasp it. (I guess I'm just not a finance person)
Could someone explain it here like you're talking to a nine year old? TIA
Want to see the real deal?
More inside scoop? View in App
More inside scoop? View in App
blind
SUPPORT
FOLLOW US
DOWNLOAD THE APP:
FOLLOWING
Industries
Job Groups
- Software Engineering
- Product Management
- Information Technology
- Data Science & Analytics
- Management Consulting
- Hardware Engineering
- Design
- Sales
- Security
- Investment Banking & Sell Side
- Marketing
- Private Equity & Buy Side
- Corporate Finance
- Supply Chain
- Business Development
- Human Resources
- Operations
- Legal
- Admin
- Customer Service
- Communications
Return to Office
Work From Home
COVID-19
Layoffs
Investments & Money
Work Visa
Housing
Referrals
Job Openings
Startups
Office Life
Mental Health
HR Issues
Blockchain & Crypto
Fitness & Nutrition
Travel
Health Care & Insurance
Tax
Hobbies & Entertainment
Working Parents
Food & Dining
IPO
Side Jobs
Show more
SUPPORT
FOLLOW US
DOWNLOAD THE APP:
comments
ELI9:
You’re a candy maker and you know you will have made hundred pieces of candy on October 1st. You want to sell this candy in October to pay rent at your candy factory, but because of Halloween there will be a ton of candy for sale November 1st for cheap, so if you don’t sell it before November 1st at at least $1/candy you’re out of luck. You write a call contract, stating you will sell 100 pieces of candy at a fixed price of $1 on October 1st.
I own a candy store and I know for sure that I will need a hundred pieces of candy in October to sell.I buy your call, paying you money then, so that I don’t need to worry about the price on October 1st and can have a fixed estimate for the cost of the inventory today. The price of candy on the open market may be $.75 on October 1st, in which case I ignore your contract, or it might be $1.25 and I saved money. However, I needed a guarantee of having candy, so I’m willing to pay the fixed amount of premium before October.