Call Options

A stock can be decomposed into simple vectors, a scalar, Strike Price, and an expiration date. Call Option: A vector that begins at the strike price, ends at the termnal price, and extends upward until expiration. Put Option: A vector that begins at the strike price, ends at the termnal price, and extends downward until expiration. It's value is -price. Strike Price: A scalar representing the starting price of the options. Stock=Call+Strike(Cash)-Put Often referred to as Put/Call Parity. Most important: Stock+Put=Call+Cash.