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21 Cards in this Set
- Front
- Back
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Option
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A contract that gives its owner the right to buy or sell some asset at a fixed price on or before a given date.
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Exercising the option
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The act of buying or selling the underlying asset via the option contract.
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Strike price
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The fixed price in the option contract at which the holder can buy or sell the underlying asset. Also, the exercise price or striking price.
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Expiration date
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The last day on which an option may be exercised.
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American option
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An option that may be exercised at any time until its expiration date.
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Call option
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The right to buy an asset at a fixed price during a particular period.
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Put option
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The right to sell an asset at a fixed price during a particular period of time. The opposite of a call option.
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Intrinsic value
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The lower bound of an option's value, or what the option would be worth if it were about to expire.
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Employee stock option (ESO)
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An option granted to an employee by a company giving the employee the right to buy shares of stock in the company at a fixed price for a fixed time.
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Real option
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An option that involves real assets as opposed to financial assets such as shares of stock.
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Investment timing decision
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The evaluation of the optimal time to begin a project.
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Managerial options
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Opportunities that managers can exploit if certain things happen in the future.
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Contingency planning
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Taking into account the managerial options implicit in a project.
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Strategic options
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Options for future, related business products or strategies.
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Warrant
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A security that gives the holder the right to purchase shares of stock at a fixed price over a given period of time.
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Convertible bond
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A bond that can be exchanged for a fixed number of shares of stock for a specified amount of time.
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Conversion price
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The dollar amount of a bond's par value that is exchangeable for one share of stock.
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Conversion ratio
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The number of shares per bond received for conversion into stock.
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Conversion premium
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The difference between the conversion price and the current stock price, divided by the current stock price.
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Straight bond value
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The value a convertible bond would have it could not be converted into common stock.
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Conversion value
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The value a convertible bond would have it were to be immediately converted into common stock.
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