7 Cool Facts about Vanilla Options
Vanilla options give you the right to buy or sell a security before or on a certain date at an agreed price. For example, you could have a vanilla option to sell a stock at $30, with an expiry of three months. If the stock falls below $30 within three months’ time, then you can sell and make a profit. However, despite being called a vanilla option, there are lots of cool things you need to know.
There are actually two types of vanilla option. The first one is known as a call, and this gives you the right to buy a security at a given price. If you think that a stock is going to go up before the option expires, then you may buy a call.
The other type of is known as a put. In this case, this type of option gives you the right to sell a security at a particular price before the option expires. If you think a stock price is going to go down before the option expires then you may buy a put.
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