| Corporate finance course | Calls and puts |
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| The call option is the possibility to buy a stock at a specified striking price on or before a specified date. You do not need the money, because you are not obliged to buy the stock at the expiry of the option. If you exercise the option, you can buy on credit and sell it the day after. On the contrary, you are not allowed to sell a call (risky position) if you do not have the money in your bank account. The put option is the opposite= possibility to sell a stock The difference between European and American options is that American options can be exercised before the maturity. But if no dividend is served, there is no reason to exercise the option before maturity. A warrant is a long term call option issued by a company. Typically, warrants are issued in a package with privately placed bonds. Afterwards, they become detached and trade separately Warrants and convertibles are issued by corporations. Call options are traded between individual investors. A convertible is a bond + a call option Different strategies exist: ex= buy puts and sell calls = collar The value of options >> |
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Corporate finance PART ONE: CAPITAL EXPENDITURE PART TWO. BASICS OF FINANCE PART THREE FINANCING DECISIONS PART FOUR FINANCIAL MANAGEMENT Course created and updated by Dr David Chelly, PhD in Management sciences from the University of Tours.
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