Markets · 6 pages · 12 min

How options differ from the shares

An option is a timed right to buy or sell shares at a strike, not ownership of the company.

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From the opening

A share is a piece of ownership in the company, and it remains until the company or a buyer retires it. An option is a separate contract, with a strike and an expiration, that gives its holder the right to buy or sell shares without obligating the holder to do either. The opening covers shares are ownership without expiry, options carry a strike and a date, and premium is not company capital.

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Inside

Shares are ownership without expiry
Options carry a strike and a date
Premium is not company capital
Exercise is when shares move
Where the idea stops applying
A distinction worth keeping

Sources

Call and put option contracts
Equity ownership versus a derivative right

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How options differ from the shares

From the opening

Inside

Sources

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