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Showing results for tags 'options'.
Found 166 results
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Optionable stocks are simply stocks that traders can trade in the options market. Information about optionable stocks is usually released to investors on a periodic basis, and traders can use this information in making trade decisions.
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If there are several types of options contracts (e.g. covered calls and puts + bear and bull spreads + straddles and strangles) that are available for one single asset, then all the contracts are collectively called the options series.
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For company stocks issued as stock options, the opion schedule is a very important tool. On the company side, it is useful for maintaining accounting records while on the investor's side, it is used for forecasting current and future liabilities, especially in terms of the potential for common shares to be diluted by exercised stock options.
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Option pricing is a system that attempts to place appropriate value on an options asset. Options valuation is complex, and therefore several option pricing models have come to be used, taking into consideration several factors such as time value, put-call parity, etc, in order to come up with the correct value for the asset.
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Some options trades require that some amount of money is either paid to the trader when the trade is executed, or that the trader pays money to the dealer when the trade is executed. This is the option premium, and is calculated based on the number of options contracts purchased or sold.
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The options margin is a highly leveraged market, as option trades require a large capital outlay. Leverage allows traders to borrow large amounts of money from brokers to setup options trades, but are required to deposit a collateral for each trade. In the event of a loss, the trader's option margin is used to clean out the losses while preserving the borrowed funds, which are returned to the broker.
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The purpose of the Options Disclosure document is to alert new traders on the risky nature of trading the options market, so that they are fully aware of what they are about to get into. It also serves to indemnify brokers from trading losses incurred by these traders.
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This is the description given to the months in an option cycle. This can sometimes provide information as to how options will behave in a particular monthly cycle. For instance, energy commodities are in greatest demand in the winter months of the year, and this information can be used to trade energy options based on demand and supply.
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Options are usually listed according to class or according to sector. Usually, assets with similar characteristics are listed in the same option class. For instance, Google, Apple and Microsoft are usually listed in the same option class because of the similarities in the products that they sell.
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Simply put, an option stipulates the name of the asset, the market price, strike price, and the calls and puts for the stock at any particular time. The option chain is a component of the option quotation system.
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An option contract is made up of 100 shares, and options represent another way to trade the financial markets in several different ways.
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An open interest with a large value implies that there is more activity and liquidity for the contract.
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This is an option trading strategy that is also used in the binary options market, when the trader expects the price of the asset to touch or breach a particular price level (the strike price). Some platforms allow the trader to set the strike before trading while other platforms set the strike by default.
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It is calculated as the derivative of gamma, and it gives the investor an idea of how the option and the underlying instrument moves together.
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This type of option is used to trade on commodities when there will be a physical exchange of the commodity asset between the buyer and seller.
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This is the price difference between the option premium received for selling a call and buying a put at the same time, usually in option contracts that require both types of positions (e.g. covered calls). Depending on which premium is higher, the net option premium could be positive (premium on call > premium on put) or negative (premium on put > premium on call).
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Since the trade is made at a price that would almost guarantee success of the options trade within the expiry limits, the cost of executing such trades is usually higher, hence the higher premiums paid.
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A naked writer is another name for a trader who sells an options contract without hedging or covering the trade.
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A naked put is an un-hedged or uncovered put options trade. The trader does not own the underlying asset, so the trade's loss cannot be offset by a positive gain that would have occurred in the asset if it had been owned.
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A naked position is an options trade position that is not protected by a hedge, usually in form of a contrary trade direction in the asset's parent market. A naked position is thus exposed to full market risk.
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In a naked option, an investor will either make a profit or loss depending on the movement of the underlying asset. The loss cannot be covered by a corresponsing gain in the asset's parent market, hence the naked option is also called an uncovered option.
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A naked call is an un-hedged or uncovered call. The call writer does not own the underlying asset, so the trade's loss cannot be offset by a positive gain that would have occurred in the asset if it had been owned.
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Multi-leg orders enable options traders to purchase multiple blocks of options at the same time, thus saving money on commissions as these are paid only once, as opposed to if the trader had to purchase these options at different times. These options would ordinarily not be purchasable at the same time. It is most often used in multi-legged strategies like straddle, strangle and butterfly.
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First created in the 1990s by Societe Generale, these options are a combination of basket style options and range options. Examples of mountain range options are Atlas, Everest, Himalayan and Annapurna options.
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The Montreal Exchange is a derivatives trading exchange where futures and options contracts can be traded. The underlying assets on which options are traded on the MX are stocks, ETFs, indices and currencies.
