Saturday, July 12, 2008

Define Option Contract & Florida Real Estate

Let’s take a look at the word Option. The definition of “Option” is provided by

“The right, but not the obligation, to buy (for a call option) or sell (for a put option) a specific amount of a given stock, commodity, currency, index, or debt, at a specified price (the strike price) during a specified period of time. For stock options, the amount is usually 100 shares. Each option has a buyer, called the holder, and a seller, known as the writer. If the option contract is exercised, the writer is responsible for fulfilling the terms of the contract by delivering the shares to the appropriate party. In the case of a security that cannot be delivered such as an index, the contract is settled in cash. For the holder, the potential loss is limited to the price paid to acquire the option. When an option is not exercised, it expires. No shares change hands and the money spent to purchase the option is lost. For the buyer, the upside is unlimited. Options, like stocks, are therefore said to have an asymmetrical payoff pattern. For the writer, the potential loss is unlimited unless the contract is covered, meaning that the writer already owns the security underlying the option. Options are most frequently as either leverage or protection. As leverage, options allow the holder to control equity in a limited capacity for a fraction of what the shares would cost. The difference can be invested elsewhere until the option is exercised. As protection, options can guard against price fluctuations in the near term because they provide the right acquire the underlying stock at a fixed price for a limited time. risk is limited to the option premium (except when writing options for a security that is not already owned). However, the costs of trading options (including both commissions and the bid/ask spread) is higher on a percentage basis than trading the underlying stock. In addition, options are very complex and require a great deal of observation and maintenance. also called option contract.”

Now let’s take a look at the word Contract. The definition of “contract” as provided by is:

“A binding agreement between two or more parties for performing, or refraining from performing, some specified act(s) in exchange for lawful consideration.”
When we put them to gether, we have the option contract. You may use the option contract to purchase a short sale in the State of Florida. Much has been written about Florida real esate and the short sales that can be bought and sold with the option contract. To learn more, simply follow the option contract for Florida real estate and you will learn much more about Florida short sales.

Locate Florida short sales with option contracts and in other real estate markets.

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