The Wallace miner. [volume] (Wallace, Idaho) 1907-current, 1917-06-14
PUTS" AND CALLS
WHAT IS THE MEANING
FAMILIAR TERMS ON STOCK Ex-
CHANGES EXPLAINED FOR
THE LAYMAN.

For many years men In Wall street
have dealt in puts and calls" which
are agreements whereby one man OBJ
ligates himself to deliver to or receive
from another certain number of
shares of stock, at a specified price,
within a given time. In Chicago,
where the greater volume of specula-
tion is confined to the. articles of pro-
duce traded in on the board of trade,
the same practice prevails, only in
Chicago they call them ups and
downs" Recently, or since the war
started and made of New York real
center for transactions in foreign ex-
change, the put and call idea has been
communicated to this market and to-
day it is possible to buy options on
the currency of foreign countries. In
other words, you can now gamble in
money, says the Brooklyn Eagle. You
can bet that German reichsmarks will
| go up, or that Russian rubles will &c
down in the worlds money market
eign exchange market.
How System Works.
To understand fully the workings OF
these options" which is the general
term for both puts and calls--another
name used in the financial district j.;
'privilege'r-a word of. explanation as
to the method of dealing in stock "op-
TONS A man believes that United
StatesnSt for example, Is about tC
advance To take advantage of the
rise he can do one of two things, He
can buy some of the stock or he car
buy a call. If he does the latter, his
capital outlay will be much smaller
but to profit to any extent the STOCK
will have to advance substantially
What he does is this. Steel. we will
say, is selling at no. He buys call
which would be described in the par
lance of New street, the home of priv
ileges, as -four points up. good for 80
days, price SIPS" Elucidated, he
means, that some one, in consideration
for the payment of $125, has agreed to
deliver to him 100 shares of United
States Steel common at ia, at any
time he cares to CALI it within 80
days. If the stock, within this period
should advance to 1870. he could call
his stock at la. sell it in the open
market at 1870. and pocket the differ
ence which, less the $l25 he paid for
the option, the brokerage commission
and the state transfer tax, would be
his profit, In the matter of put,
the operation is just reversed,
Gamble in Money.
And this same system, with prac-
tically no modification, is now being
used as medium for gambling in for
eign money. However, the operation,
as now used, is not so much gambling
as it is insurance, That is to say, an
importer who may be called upon to
make payment in Petrograd or Ber-
lin or Paris or Genoa at some time
within the next year. and whose pay
ments would ordinarily be at the mer-
cy of the foreign exchange market,
may protect himself by buying q "call'
on the money current in whichever of
these centers his future payment will
have to be made.
To illustrate this feature, assume
that an importer of German goods
knows that next fall he will have to
pay 100000 reichsmarks to a merchant
in Berlin. German exchange is now
low; it Is selling at a discount of
something more than rs per cent.
But next fall the war may be over;
something approximating normal COM
mercial conditions may again be pre-
and, if so, German exchange is
apt to be much higher than it now is.
II the merchant believes this, he can
now buy a call on 100000 reichmarks
at maybe 8 or 4 cents per unit, which