Theodore A. Andros and Joan B. Andros - Page 8

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          futures contracts actually result in delivery of the underlying             
          commodity; most are offset.  Futures contracts involving sales and          
          purchases of commodities are regulated by the Commodity Futures             
          Trading Commission through the Commodity Exchange Act.                      
               A securities option is the right to buy or sell an underlying          
          security at a specific price (the “strike price”) and a specified           
          time (the expiration date).  There are two types of options: “Call”         
          options and “put” options.  In a call option, the grantor (or               
          seller) of the option is required, if the buyer so desires, to sell         
          the underlying security to the buyer at the strike price on the             
          expiration date.  The buyer of a call option has the right to               
          “call” the security from the seller.  The buyer is “bullish” on the         
          underlying security; he is betting that the market price of the             
          underlying security will rise above the strike price.  If that              
          happens, the option buyer will purchase the security on the                 
          expiration date at the strike price, which will be less than the            
          current market price.  With a put option, the grantor (or seller)           
          of the option is required, if the buyer so desires, to purchase at          
          the expiration date the underlying security put to him by the buyer         
          at the strike price.  In this latter case, the buyer is “bearish”           
          on the underlying security.  He is betting that the market price of         
          the underlying security will fall below the strike price by the             
          expiration date.  In that case, he will “put” the security to the           
          option writer, who must pay the higher strike price.                        






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Last modified: May 25, 2011