The chooser option is for those who like to think over their investing decisions. Or you might call them "indecisive people" if you want to get mean about it. The chooser option gives the investor time to decide between a call and a put option at expiration. This option is ideal for securities that are expected to be volatile, but the investor isn’t sure which way that volatility will go.
Chooser is considered an exotic option because it isn’t a standard option on the American or European exchange. This option is similar to a saddle option in that a call and put are both purchased at the same strike, but only one at a time is exercised, so it’s a bit cheaper to buy than a saddle.
The chooser is more expensive than the standard option though, so you have to pay a little for indecision. Generally the expiration date won’t change regardless of what option is used.
Related or Semi-related Video
Finance: What is Intrinsic Value (of An ...6 Views
Finance allah shmoop what is the intrinsic value of an
option All right this is brandi She owns a twelve
dollars strike price call option toe buy a share of
my fifteen minutes are up dot com a retirement home
chain for reality tv stars who recently gained self awareness
Well the stock is trading for fifteen bucks a share
of this moment Her strike price is twelve so the
intrinsic value of that option is fifteen minutes twelve or
three bucks that is it is three dollars in the
money and if brandy converted it into a share this
moment and then immediately sold the stock for fifteen dollars
in cash well she'd make three bucks But there's a
catch per call option doesn't expire for five weeks so
that three dollars in the money is actually worth more
than three dollars because she has data or time yet
to exercise and convert or just sell the option itself
So it's worth mohr because well a stock might go
up from fifteen dollars in overtime Stocks go up so
in the next five weeks well couldn't go up a
dime twenty cents twenty five cents and make that three
Dollars worth three ten three twenty three Twenty five Sure
sure it could happen So yeah that's The difference between
actual value and intrinsic value You get seita kickers in
there making the option's worth more than just converting them
into stock and selling them right there And yeah it
looks like our one and a half minutes are up
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