Explain How Options Are Different Than Equities?

1.	Explain How Options Are Different Than Equities?
Answer» Options are derivatives which means their values is derived from the value of an underlying investment Options are traded among institutional investors, professional traders, individual investors and securities market places By Put or Call, option trade is defined Option trading can limit an investor’s risk; it offers a known risk to buyers More than the price of the option, option buyer cannot lose money Regular equities can be HELD for indefinite time while options have expiry date LIKE regular equities, option does not have physical CERTIFICATES Owning an option does not mean RIGHT to ownership of any share or dividends of a COMPANY unless the option is exercised

Answer»

Options are derivatives which means their values is derived from the value of an underlying investment
Options are traded among institutional investors, professional traders, individual investors and securities market places
By Put or Call, option trade is defined
Option trading can limit an investor’s risk; it offers a known risk to buyers
More than the price of the option, option buyer cannot lose money
Regular equities can be HELD for indefinite time while options have expiry date
LIKE regular equities, option does not have physical CERTIFICATES
Owning an option does not mean RIGHT to ownership of any share or dividends of a COMPANY unless the option is exercised

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