MANAGEMENT

Detailed explanation-1: -There are two types of options: call, which gives the holder the right to buy an underlying asset for a certain price by a certain date. A put option gives the holder the right to sell the underlying asset. Thus, any change in the value of a derivative reflects the price fluctuation of its underlying asset.

Detailed explanation-2: -There are two types of options contract: puts and calls. Both can be purchased to speculate on the direction of the security or hedge exposure. They can also be sold to generate income.

Detailed explanation-3: -The number of options contracts to buy. Each options contract controls 100 shares of the underlying stock. Buying three call options contracts, for example, grants the owner the right, but not the obligation, to buy 300 shares (3 x 100 = 300).

Detailed explanation-4: -There are four basic options positions: buying a call option, selling a call option, buying a put option, and selling a put option. With call options, the buyer is betting that the market price of an underlying asset will exceed a predetermined price, called the strike price, while the seller is betting it won’t.