Equity Market and Options

Common stock

right to vote, residual claim, limited liability

Preferred stock

pays fixed dividends, no votes, payback priority, cumulative (unpaid dividends are carried forward)

ADRs

certificate that significas ownership in foreign company, expressed in dollars

Call Option

gives holder right to buy an asset at specified price, best when asset price rises above specified price

Put option

gives holder right to sell at a specified price, best when asset price dips below specified sell price

Long position futures

purchaser buys specific quantity at contract expiration for set price, profit when price rises

Short position futures

contract seller delivers underlying commodity at contract expiration for specific price, profit when price dips