Discuss how stock options work and the difference between a put and a call. Are there any...

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Finance

Discuss how stock options work and the difference between a putand a call.
Are there any additional risks involved when tradingoptions?
After doing research you expect profit and stock price to fallin the near future at The Purple Grape wine company because of badweather during the grape growing season. How would you as aninvestor try to profit from this with options?
Pick two of the four choices below and explain yourreasoning.
Buy a call
Sell a call
Buy a put
Sell a put

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3.6 Ratings (467 Votes)

Stock options are derivative contracts which means that they derive their value from an underlying asset Stock options give the buyer the right to either buy or sell the underlying at a particular price on a prespecified date and for this he pays a premium On the other hand the seller has the obligation to either buy or sell the underlying at a particular price on a prespecified date if the buyer exercise his right and for this he receives the premium from the See Answer

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Discuss how stock options work and the difference between a putand a call.Are there any additional risks involved when tradingoptions?After doing research you expect profit and stock price to fallin the near future at The Purple Grape wine company because of badweather during the grape growing season. How would you as aninvestor try to profit from this with options?Pick two of the four choices below and explain yourreasoning.Buy a callSell a callBuy a putSell a put