Option Contract Size

State:
Multi-State
Control #:
US-01729-AZ
Format:
Word; 
Rich Text
Instant download

Description

The Option to Purchase Real Estate form is designed to facilitate a formal agreement between an owner and an optionee regarding the potential purchase of real property. A key feature of this form is the specification of the option contract size, which defines the amount the optionee must pay to exercise the option. Users fill in the effective date, automatic termination date, and the consideration amount, as well as provide details about the property, including its address and legal description. The form includes clear instructions for the optionee on how to exercise the option, emphasizing that written notice must be sent before the termination date. Key provisions such as non-assignability, modification requirements, and the binding effect on successors are included to ensure clarity and enforceability. This form is especially useful for attorneys, partners, owners, associates, paralegals, and legal assistants involved in real estate transactions, providing a structured means of establishing and managing the purchasing rights of parties. Proper completion of this form can help safeguard the interests of both parties and facilitate a smoother transaction process.
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FAQ

While the appropriate dollar value of the trade should depend on your tolerance for loss (i.e., how much you are willing to lose), the size of your trade (i.e., the number of contracts) is determined by your tolerance for loss as well as the gain/loss potential per contract.

The contract size is the quantity of the underlying value that corresponds to one option contract. The contract size is based on the trading unit and the pricing unit (is often 1). The lifetime of an option is the maximum period during which the option represents a right.

Each futures contract specifies is the quantity of the product delivered for a single contract, also known as contract size. For example: 5,000 bushels of corn, 1,000 barrels of crude oil or Treasury bonds with a face value of $100,000 are all contract sizes as defined in the futures contract specification.

The terms of an option contract specify the underlying security, the price at which that security can be transacted (strike price), and the expiration date of the contract. In the case of stocks, a standard contract covers 100 shares, but the share amount may be adjusted for stock splits, special dividends, or mergers.

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Option Contract Size