FREE Trial

A call option effectively is a bet that a company's stock is going to increase in value

Question:

A call option effectively is a bet that a company's stock is going to increase in value by the date specified in the call option agreement. Call options often can be purchased for a small amount and can yield a large profit if a stock rapidly appreciates in value. Do the insider trading rules prohibit the purchase of call options based on material, nonpublic information?
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Answer rating: 28% (7 reviews)

Yes The gains from holding stock options are often far greater ...View the full answer


answer-question-section
Answered By
tutor-profile-image
Bhartendu Goyal
Professional, Experienced, and Expert tutor who will provide speedy and to-the-point solutions. I have been teaching students for 5 years now in different subjects and it's truly been one of the most rewarding experiences of my life. I have also done one-to-one tutoring with 100+ students and help them achieve great subject knowledge. I have expertise in computer subjects like C++, C, Java, and Python programming and other computer Science related fields. Many of my student's parents message me that your lessons improved their children's grades and this is the best only thing you want as a tea...
3.00+ 2+ Reviews 10+ Question Solved
Related Book For  book-img-for-question
Ethics in Accounting A Decision Making Approach

Ethics in Accounting A Decision Making Approach

ISBN: 978-1118928332

1st edition

Authors: Gordon Klein

See More Books
Question Posted:
See More Questions

Related Video

A call option is a type of financial contract that gives the holder the right, but not the obligation, to buy an underlying asset (such as a stock, commodity, or currency) at a specified price (called the strike price) within a specified period of time. When an investor purchases a call option, they are essentially betting that the price of the underlying asset will rise above the strike price before the option\'s expiration date. If the price of the asset does rise above the strike price, the investor can exercise the option by buying the asset at the strike price and then selling it at the higher market price, thereby earning a profit. Call options are often used as a speculative investment strategy, as they allow investors to potentially profit from the upward movement of an asset without having to actually own the asset itself. They are also commonly used as a hedging tool to protect against potential losses in a portfolio.

Students also viewed these Organizational Behavior questions

The Complete Reference Storage Networks 1st Edition - ISBN: 0072224762 - Free Book