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Showing results for tags 'option'.
Found 240 results
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This is also known as the money that changes hands when an option contract is acquired. The seller of the contract receives the premium as payment, and the buyer pays the premium as a cost.
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The position limit is either set by the Commodity Futures Trading Commission or by the exchange on which the options contract is traded, and is used to prevent a situation where a few market players can unduly influence price behaviour based on the volume of their holdings.
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Pinning the strike usually occurs as a result of lots of open interest in calls and puts, and the back and forth activity of options traders on both sides of the contract as they unwind positions, keeps the price hovering around the strike price.
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When a pin risk occurs, the writer of the option faces a potential loss whether or not he covers his position.
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Physical options are used by farmers and dealers as a means of actually exchanging commodity assets at predetermined prices so as to protect against the effects of price fluctuations that would be unfavourable to either party, and to supply the goods to the end-users.
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Physical deliveries are a common feature of commodities markets, where the commodity sellers (farmers and dealers) deliver the physical commodity on which a contract has been made out to the end-buyer.
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Perpetual options do not require the trader to be exact about what time frame the asset will achieve the trade objectives. This is unlike the situation in conventional or binary options where prediction of expiry times are just as important as prediction of asset price behaviour.
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There are several types of path-dependent options. As the name implies, payout depends on the "path" that the option chose to follow. The sequence of pattern of strike price attainment for instance, determines the eventual payout. This type of trade is used by traders to trade an asset whose value is expected to fluctuate a lot during the life of the contract, as opposed to just heading up or down in a straightforward fashion.
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This strategy is mostly used by speculative options writers who aim to collect premiums from such trades, hoping that the trades will expire worthless on the buyers of such an option.
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An overwrite is a type of covered call and is therefore a hedging strategy that is used when the trader already owns the asset but intends to generate maximum returns from the added premiums that will be collected.
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This is a measure of the usage of stock options in a company and consequently, the measure of the level of dilution that shareholders of a stock will be exposed to when stock options are used as compensation to employees or executives. A higher overhang produces more dilution and reduces the returns on the shareholding. A lower overhang reduces the diluting effect.
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Outright options are unhedged trades and therefore carry greater risk as any losses incurred cannot be offset by contrarian hedged positions in the market where the parent asset is listed.
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In the binary options market, outperformance options are traded as "paired options". Here, traders are presented with two assets in the same class and with similar characteristics, and traders are required to predict which asset will outperform the other within a given time frame.
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An option is out of the money when it ends in a contrary position to that taken by the trader. In other words, an option that is out of the money is a losing trade in the options/binary options market.
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OTC options present easier entry opportunities to traders to trade options, but these options are more risky because they are not subject to the stringent regulations that options listed in the conventional options markets are subjected to.
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The entire sequence of data collection, consolidation and dissemination from the participating options exchanges to the end users and approved vendors is governed by OPRA.
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These are simply options trades that are done on futures contracts as opposed to spot assets.
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The OIC serves as the resource center for equity options education.
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This is used to setup several options trades simultaneously so that the premiums from the net credit trades cancel out the premiums paid on the net debit trades, thus allowing profits to be strictly determined by the asset performance.
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Purchasing a put and selling a call at a lower strike price is an example of a zero cost collar trade.
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The principle of trading debt instruments as options is based on the whether the interest payable on that instrument is above or below the strike price of the trade. Money is made when a call option holder on a yield-based option holds an options position which ends in the interest being higher than the strike, or when a put option holder holds a position which ends with the interest being lower than the strike price of the asset.
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Weather conditions such as hurricanes and drought can radically affect the supply of agricultural and energy commodities. These assets are therefore suitable candidates for employing weather derivative protection.
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This is an asset which can be traded in the options market using various trade types. A trader trading the VIX option is trading market volatility.
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Apart from being used to gauge the volatility of an option or other asset in the financial markets, the VIX can be traded as an asset on its own.
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A vest fleece allows employees to have an increased ownership stake in their company of employment.
