tarandeep singh saluja (CA FINAL) (398 Points)
22 January 2013
CA. Ankit Bhansali
(---)
(120 Points)
Replied 04 February 2013
call buyer buys a "RIGHT" to buy a share at excercise price. so call seller has " OBLIGATION" to sell when buyer approaches him
for eg: today call is sold at excercise price of 50 for rs. 5 per share.
in this case buyer pays rs 5 as premium and he has right to buy at expiration share at rs 50..
premium would be income for seller.
put buyer buys "RIGHT" to sell a share at excercise price. So Put seller has "OBLIGATION" to buy share when buyer comes to him.
for eg: today a put is sold at excercise price of 50 at premium of rs 5 per share.
here, buyer has right to sell share at rs 50 at expiration by paying rs 5 per share as premium.
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