What is the average price?
Investors often look for many different ways to increase financial revenues and at the same time reduce or mitigate the risk of investing. One particular investment tool is the possibility of put, which provides the investor's right, but not the obligation to sell shares during the market decline. The average price has a paycheck that is either at zero - which means that the investor does not investigate or lose money - even at the point where the stock price exceeds the strike. Investors most often believe that the price of the investment will drop, which means that the average price will allow them to earn money at low stock prices. In many ways, this tool allows the investor to save money on certain investments for Bearish Markets.
Put Option - a wide category at which the average price affects - carries specific rules for investment use. Again, the investor has the right to Exercis the possibility of a given period of time without an explicit obligation.do. The most common conditions for PUT is a specific amount of inventory based on the PUT writer, the set price - probably called strike or exercise price - and the expiration date. The expiry date allows the investor to act or act idle during this period under perhaps under favorable conditions. If the investment does not reach favorable prices or the company starts to operate inefficiently, the investor can simply let Put expired, of course at the cost of the possibility.
The average price is what makes it exotic, as it is called in the world of investment. The price of the paycheck has only one of the two final options. If the average market price of one stock is in an option above strike or exercise price, the payout is zero. In fact, investors place these options on stocks that expect to fall in the price due to bear market conditions. When the market will rise - commonly called the bull market - the most likely result of the average price is zero due to the potential increase in shares.
Further payment at the average price is the difference between the average market price of the shares and the strike or the exercise of the option. For example, when the stock price decreases below the price of an option strike, the investor earns more money. It is similar to the investor selling short stocks, which means that it expects the stock price to reduce and desire to make money for this decline. For the average price, the investor can apply the possibility before the expiration date and make a financial return on the bear market.