Call option:
A call option can be defined as an agreement that gives the right to an investor to purchase a stock, commodity or other instrument at a certain price within a definite time period. However, the right is not an obligation.
Put option:
A put option can be defined as an option contract that gives the right to an owner to sell a definite amount of an underlying security at a definite price within a particular time. However, the right is not an obligation.
Strike price:
Strike price can be defined as the price at which a derivative may be exercised.
To plot: The value of the combination as a function of the stock price on the exercise date.
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Fundamentals of Corporate Finance (4th Edition) (Berk, DeMarzo & Harford, The Corporate Finance Series)
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