Strike point in the Mortgage Financing Agreement

Aug 6th, 2022
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How to strike point in the Mortgage Financing Agreement

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This video tutorial explains mortgage points, which are a percentage of the loan amount used to lower your interest rate. Mortgage points can vary (e.g., 0.25%, 0.75%, etc.) and are typically considered a one-time closing cost paid at closing. By paying these points, borrowers can secure a lower interest rate for the life of the loan, leading to potential savings. The video also provides examples and methods for calculating when the upfront costs will benefit the borrower, including determining the recoup time. Overall, it aims to help viewers understand if paying for mortgage points is advantageous for their financial situation.

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The strike price, also known as the exercise price, is the predetermined price at which a specific security may be purchased (for a call option) or sold (for a put option) by the option holder until the expiration date of the options contract.
Puts with strike prices higher than the current price will be in-the-money since you can sell the stock higher than the market price and then buy it back for a guaranteed profit.
The strike price of an option is the price at which a put or call option can be exercised. A relatively conservative investor might opt for a call option strike price at or below the stock price, while a trader with a high tolerance for risk may prefer a strike price above the stock price.
The strike price indicates the predetermined price at which an option can be bought or sold when its exercised. It referes to a future date. In contrast, spot price refers to the current market price of an asset.
What happens when an option hits the strike price? When the underlying stock hits the strike price of an option, the option is said to be at-the-money (ATM). For example, if an underlying stock is trading for $20/share and jumps to $25/share, the $25/strike call is now at-the-money.
Theres no such thing as a good strike price. But the strike price you choose, along with the expiration date, will determine the level of risk you assume. Typically, when you buy call options, the higher the strike price, the less expensive it will be.
A put option is in-the-money if the strike price is greater than the market price of the underlying security. Select to close help pop-up A call option is out of the money if the strike price is greater than the market price of the underlying security.
For buyers of the call option (such as in the example above), if the strike price is higher than the underlying stock price, the option is out-of-the-money (OTM).

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