Econ 205

* American Style Option: An option which may be exercises at any time up and including the expiration date.

* Call Option: The contractual right, but not the obligation, to buy a specific amount of a given financial instrument at a fixed price before or at a designated future date.

* Put Option: The contractual right, but not the obligation, to sell a specific amount of a given financial instrument before or at a designated future date.

Commercial Paper: A short-term unsecured promise to repay a fixed amount on a future date and at a specific place.

* European Style Option: An option which may be exercises on the on the expiration date.

* Strike Price/Exercise Price: The fixed price at which an option holder has the right to buy, in the case of a call option, or to sell, in the case of a put option, the financial instrument covered by the option.

Futures Contract: An exchange-traded contract generally calling for delivery of a specified amount of a particular grade of commodity or financial instrument at a fixed date in the future.

In the Money: Option contracts where there is a net financial benefit to be derived from exercising the option immediately.

* At the Money: An option contract where the price of the underlying instrument is very close or equal to the option's exercise price.

Out of the Money: An option contract where there is no benefit to be derived from exercising the option immediately.


* A call option is out of the money when the price of the underlying is below the option's exercise price.


*
* A put option is out of the money when the price of the underlying is above the option's exercise price.