PDA

View Full Version : Options - Can someone please explain them??



djones
28-10-2006, 09:54 AM
Hi,
Have never invested in options before so could someone please explain what they are and how they work. Could you use Barramundi.NZX Options as an example. Thanks!!
- Duncan

Snow Leopard
28-10-2006, 10:35 AM
Have you read The Barramundi Offer Document (http://www.barramundi.co.nz/barramundi-prospectus.pdf)? (You could do a search on the word warrant to narrow down your reading to the relevent bits).

Barramundi actually issued warrants, though for all practicable money making purposes options and warrants amount to the same thing.

regards

Paper Tiger

duncan macgregor
28-10-2006, 11:30 AM
djones, The best place to find out is on sharechat, in the education section. You will learn everything about investing in the market at no cost to you. It is better to have an educated understanding before making investment decisions. macdunk

Deev8
28-10-2006, 11:42 AM
quote:Originally posted by djones

Have never invested in options before so could someone please explain what they are and how they work.

The most common options that you will come across are Call Options on listed shares. These options are a contract which gives the holder the right, but not the obligation, to buy a fixed quantity of a particular share at a specified price at a particular time (or over a particular period of time). The value of the options at any point in time will depend on the current market price of the shares in question, the option exercise price (how much you have to pay to exercise the right to buy each share under the terms of the option contract), and when the option is exercisable. Call options usually increase in value when the price of the underlying share rises.

In many markets Put Options are also traded. They give the holder the right, but not the obligation, to sell a fixed quantity of a particular share at a specified price at a particular time (or over a particular period of time). Put options usually increase in value when the price of the underlying share falls.