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LSDefine

Simple English definitions for legal terms

call option

Read a random definition: nient dedire

A quick definition of call option:

A call option is a contract that lets someone buy something at a certain price until a certain date. The person who buys the option doesn't have to buy the thing, and the option ends on the date. People buy call options because they can make money if the price goes up, and the person who sells the option can make money if the price goes down. For example, someone could buy an option to buy 100 shares of a company for $100 each, and if the price goes up to $200, they could make a profit. But if the price stays low, the person who sold the option can make money.

A more thorough explanation:

A call option is a type of contract that gives the buyer the right, but not the obligation, to buy an asset or service from the seller at a specific price, known as the strike price, on or before a certain date. The buyer pays a premium to the seller for this option. The seller, in turn, benefits from the premium and hopes that the asset's price will not rise above the strike price.

Sarah buys a call option for $1,000 to purchase 100 shares of Banana Inc. at $100 per share. The option expires in one year. If the market value of Banana Inc. rises to $200 per share, Sarah can exercise her option and buy the shares at the lower strike price of $100 per share. She can then sell the shares at the market price of $200 per share, making a profit of $9,000. However, if the market value of Banana Inc. remains below $100 per share, Sarah will not exercise her option, and the seller keeps the premium of $1,000.

This example illustrates how a call option can be used to speculate on the price of an asset. Sarah believes that the price of Banana Inc. will rise, so she buys a call option to benefit from the potential increase in value. The seller, on the other hand, hopes that the price will not rise above the strike price, allowing them to keep the premium without having to sell the asset at a loss.

call | calumny

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NosyBeagle
15:35
wasn't required to do a capstone so i didn't ;^; maybe that would've looked good on an app
NosyBeagle
15:35
I'm sigma tho so it's fine
15:36
I signed up for a systems and networking capstone but the normal prof wasn’t teaching it that sem and the new prof just made it a swe capstone which i didn’t like
Applesaucer
15:37
chat gpt
15:37
I wanted to do the cybersec capstone but it was at the same time as another class I had to take
NosyBeagle
15:37
chat gpt bad chat gpt stinky
15:38
wtf goin on in off topic
15:38
ugh lets all go hit our vape in the bathroom
NosyBeagle
15:38
r u gonna do something in tech law
15:38
sex work engineering
15:39
@Applesaucer: hiiiii
15:39
I’m bored already
NosyBeagle
15:39
that might be a major in the future tbh
NosyBeagle
15:39
SEX 101: Introduction to Sex
15:39
I used chatgpt for my comparative language class aint no way im learning racket
sex work ai law
a college in UT taught a course on porn, so i think we're close to SEX101
Applesaucer
15:40
@esoterica: wassup shawty bae
15:40
@NosyBeagle: the current plan is privacy/cybersec law
we truly live in a society
NosyBeagle
15:41
@NemoPropheta: love to hear it. I am thinking about something in the corporate sphere and maybe pro bono immigration work on the side
15:41
damn UT GOON101
NosyBeagle
15:42
What's your major? Gooning with a Sex Engineering minor
15:42
Gooning with a concentration in Intox and a hypno minor
15:43
i majored in Instagram Reels
NosyBeagle
15:45
I miss IG. Had to leave all social media cus it was doing my head in
NosyBeagle
15:49
but i love brainrot so much
I majored in baddies
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