Backdating stock options wikipedia dating bradford

Posted by / 07-Sep-2020 14:07

Backdating stock options wikipedia

A put gives the holder the option of selling or not selling stock or a commodities futures contract at a fixed price for a fixed period of time.Because an option only has value for a fixed period of time, its value decreases with the passage of time.Because of this feature, it is considered a "wasting" asset.There are four parts to an option: the underlying security, the type of option (put or call), the strike price, and the expiration date.For example, International Widget may issue an option to a key employee, which will allow the employee to purchase one hundred shares of stock at the fair market value at the grant date.The employee has five years in which to exercise that option.Take, for example, an "International Widget July 100 call." International Widget stock is the underlying security, July is the expiration month of the option, 0 is the strike price (sometimes referred to as the exercise price), and the option is a call, giving the holder of the call the right, not the obligation, to buy one hundred shares of International Widget at a price of 0.

The period during which an option can be exercised is specified in the contract.

The offer is irrevocable for the stated period of time.

Like most other contracts, the option contract is not terminated by the sub-sequent death or insanity of either party. The seller can state to the purchaser, "If you pay me 0 today, I promise to sell Whiteacre to you for ,000 on the condition that you pay the ,000 within sixty days." If the purchaser pays the 0, a unilateral contract—an agreement in which there is a promise on only one side and a possibility of a performance by the other side—is created, and the offer is irrevocable.

"Exercise" of an option normally requires notice and payment of the contract price.

Thus, a potential buyer of a tract of land might pay ,000 for the option which gives him/her a period of time to decide if he/she wishes to purchase, tying up the property for that period, and then pay 0,000 for the property.

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An option is a type of contract that is used in the stock and commodity markets, in the leasing and sale of real estate, and in other areas where one party wants to acquire the legal right to buy something from or sell something to another party within a fixed period of time.