Question

How can be the options based on market opportunities can be differ? Explain in details?

Answer 1

Options are financial instrument that are derivatives based on the value of underlying securities such as stocks.An options contract offer the buyer the oppertunity to buy or sell the underlying assets.these are two types -

1) call options - Allow the holder to buy the asset at a stated price within a specific timeframe.

2) put option - allow the holder to sell the asset at a stated price within a specific time frame.

Trader and investors will buy and sell options for several reasons.options speculations allows a trader to hold a leveraged position in an asset at a lower cost then buying share of assets.investor will use options to hedge or reduce the risk exposure of their portfolio.

In some cases option holders can generate income when they buy call options .

Delta represnt the change of rate between options price and the underlying assets. Theta represnt the rate of change between option pricd and time sensitivity.gamma respresent the rate of changr between options delta and underlying asset price.vega used the rate of change in between options value and the underlying asset implied volatility.rho used the rate of change between option and interest rate.