Decide if an option is a derivative security, discussion help

Need response to other student discussion post

Decide if an option is a derivative security. Give reasons to support your decisions.

1. An Option within the derivative is a privilege that is sold by one party to another, but is not obligate to buy or sell a security at a certain time. The Option has a premium that must be paid. There is risk that come with options and they are complex securities. Derivatives has been around and use within the farming industry. There are other names that are use with this option. The Put Option is one and has the right to sell stock at a specified price. This option is for a limited time; American Option are at any time but has an expiration date. The European Option ban be exercised on the expiration date.  

Compare and contrast options for warrants and calls in terms of pricing, and explain their most important differences. 

2 .Warrants and call options are similar in that they both give the holder the right, but not the obligation, to buy a stock share. With a warrant, it’s at a fixed price directly from the company for a pre-defined amount of time. With a call option it’s at a set price for a defined amount of time. A major difference between warrants and call option is that warrants are issued by a specific company, and call options are issued by an options exchange. Another difference is that warrants usually have longer maturity periods than a call option. A third difference is that warrants cause dilution because a company has to issue new stock when a warrant is exercised. Exercising a call option does not require issuing new stock because a call option is a derivative instrument on an existing common share of the company.

"Is this question part of your assignment? We can help"