), option owner wants to buy the stocks, so he has to pay the asking price (107) so his loss could be bigger than the price he is paying for the option(4), so he decides to not exercise his option... what do you think? is it right?
### gtcrackerjac:
The buyer of a put option believes the underlying stock will go down in value. The buyer pays a premium for the right, but not the obligation, to sell the stock at the strike price. In exchange for the premium, the buyer can "put" the stock to the option writer, who is obligated to buy it at the strike price. If the stock is at $100, and the buyer exercises the $95 strike put option, they receive $95 per share and make a $5 profit per share. This is minus the premium they paid when they bought the option. So if the premium was $3, they would make a $2 profit per share on the stock.
### AI:
great:)... and for DTE - Days to Expiry - right?
### gtcrackerjac:
Correct. The number of days until the option expires.The purchase of an option contract does not oblige the buyer to exercise the contract (and the seller must stand ready to honor the contract if it is exercised). A buyer who does not exercise the option or sell it to someone else for a profit before expiration, simply allows the option to expire worthless. It is for this reason that options are referred to as wasting assets; they are not assets that maintain their value indefinitely. They have a life, and when that life expires, the asset is worthless.Date of Expiry
### AI:
another question:),... if it expires worthless, does it mean, that option buyer losses all the money he paid for the option? or just the difference between the actual stock price and strike price?
### gtcrackerjac:
He loses all the money he paid for the option.
### AI:
so when option expire and strike price is above the actual stock price, the buyer lost all the money he paid for the option? or if strike price is lower than actual stock price, the option will be sold to someone else for a profit before expiration, the buyer has a possibility to make a profit, otherwise the option expires worthless?
### gtcrackerjac:
If the strike price is above the actual stock price at expiration and the call option buyer exercises his option, he must buy the stock at the market price, but he will sell it at the strike price. He will lose the premium he paid for the option, and will also have to pay the
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