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The_Basics_of_Options-feat CHAPTER 9:PRINCIPLES OF OPTIONS, Option…

- - - - :star:BMSB is the spot markets
      - :star:BMDB is the option markets
      - :star:KLCI options are the derivative instrument or contract while the underlying asset or instrument will be KLCI.
- - - - :explode:In-the-money is the option which gives the holder profit if he exercised his option.
      - :explode:Call ITM = MP > EP
      - :explode:Put ITM = MP < EP
  - - - :explode:Out-of-the-money is the option which gives the holder loss if he exercised his option.
      - :explode:Call OTM = MP < EP
      - :explode:Put OTM = MP > EP
  - - - :explode:This situation is at indifferential stage as the buyer has neither loss nor gain to exercise either his call option or put option.
      - :explode:At the money Call and Put =Market Price = Exercised Price
- - - - :tada:Intrinsic value is defined as the value of the option when it is in-the-money (ITM).
        
        call option
        
        :tada:MP –EP
        
        put option
        
        :tada:EP - MP
        
        :tada:Intrinsic value can’t be negative. If intrinsic value is negative , then it should be changed to zero
    - - :tada:Means that positive time value will be profitable for a buyer to exercise his option.
      - :tada:Premium – Intrinsic Value
- - - - :pen:Call option with a higher strike has lower intrinsic value.
      - :pen:Put option the premium is higher for those with higher strike price since it has higher intrinsic value.