Basic knowledge of options
You buy stocks, bonds and common funds. Maybe you invest in 401 (k) retirement funds. You browsed the website www.cboe.com of the Chicago Options Exchange for information and education on how to apply options for your short-term or long-term investment services. Do you know that you may have used some form of option in your daily life? Are you paying a deposit for a house, car and medical insurance every quarter? In order to prevent housing fires, car accidents and huge medical expenses, you have insurance. Some investors protect and guarantee the value of their portfolio by using the stock option or cash index. A great advantage of option is their use diversity. According to your investment strategy, they can be conservative or speculative. The option allows you to adjust your trading status according to your environment. Think about the benefits that you want to bring to you below:
You can protect the stocks you have in the market price. You can add your existing stock income. You can do your business when you buy stocks at low prices, you can put yourself in the position where you are ready to meet the market. Although you still don't know if the market price is going to rise or fall, you can get the benefits from the stock price and don't spend money to buy all stock options, how to work, in the same stock, you want to put up the market up or down When changing to convert into capital, the options can give you a trading position in the market. However, the same stock is different, for a certain trading position, whether it is in a certain individual stock or in a set of stocks that reflect the custom market, investors can take the effect of the leverage. At the same time, the options for options can enjoy the advantages of a predetermined, limited risks. In contrast, if you don't have a reserve to hold their position, the option of the option will undertake substantive risks. The option is to purchase or sell the right to purchase or sell a certain stock (or other securities) at a particular price, but not such an obligation. It is the right to bought the stock; looked at the right to sell the stock. If this option is the option of the option or falling option, it is the "buyer" of the option. On the contrary, the initial sale of the option or down the option is the "seller" of the option. The option is a contract, and the conditions for contract are standardized. It gives the buyer, but not obligations, in a specific period (until the contract expires), press a fixed price (fixed price), buy or sell a certain asset (for example, its underlying stock). For the buyer, an ordinary share option usually represents the right to buy a hundred stock stocks, and an ordinary stock point usually represents the right to sell one hundred underlying stocks. If the option of the option of the option, the option of the option must take the corresponding action in accordance with the conditions set by the option contract: selling the stock by the price (contract price) prescribed by the contract; the seller of the losing option In terms of the price (contract price), the price (contract price) is bought. All options traded in the US stock exchange are all issued by options clearing corporation, referred to as OCCs, guarantee, and clearing. OCC is a liquidation company registered at the Securities Exchange Commission (SEC), and has a reputation of "AAA" in the credit rating of Standard & Poor's Corporation. The "AAA" credit level is equivalent to the obligation to bear the opponent's obligation should be undertaken in the option transaction. The price of the option is called "PRMIUM). Regardless of the performance of the underlying stock, the losses of the option buyer will not be greater than the funds originally paid for the contract. This allows investors to control the risk assumed in quantity. On the contrary, the option of the option of the option collects the purchase of the buyer. In exchange, the risk of accepting the transfer once the contract is committed. The standardization of the same contract is consistent, all options are invalidated in a determined date, which is called the "negative date". For traditional listing options, this can be within nine months from the last day of the option listed. In addition, there is a contract expiration date from this option listing for a long-term option contract for three years, called Leaps (long-term ordinary stock expected securities). The US option (the most transaction) and European options have different regulations in contracts day and options.
American options can be compremn at any time between the date of purchase and the contract. In contrast, European options (mainly used for cash settlements) can only be accompanied by a specific date before the date of expiration of the contract. It is the right to bought an ordinary stock time to buy an ordinary stock time, buy the right of one hundred underlying stocks according to the indicated performance price. Therefore, a buyer who bought a XYZ June 110 Call, with the right to $ 110 XYZ stock before the contract of $ 110 in June, and purchased 100 shares. The buyer can do this, for this, he only needs to submit a compliance notice to the option clearing company through his economist or trading company before the expiration date of the issue. All the options for covering XYZ stocks are called an "Option Class". Each unique trading month and the individual options of the contract price are called "Option Series". XYZ June 110 is a series of individuals. A buyer who bought an ordinary share to looked down, and bought the right to sell one hundred underlying stocks according to the contract. Therefore, a buyer who bought a Zyx June 50 PUTS will sell 100 Zyx stocks before the contract of the contract of $ 50 in June. In order to perform this stock, the buyer needs to submit a compliance notice to the option clearing company before the date of expiration of this issue. All descending options covering ZYX stocks are called an "option class". Each unique trading month and the individual options of the contract price are called "Option Series". Zyx June 50 is a series of individuals. How do you use the option If you foresee a stock price will move towards a certain direction, then this kind of right to buy and sell such stocks at a specific period of time, you can provide you with an attractive investment opportunity. . What kind of options buy, depending on your view of the stock trend is affirmative (more) or negate (look empty). If you are sure about the stock trend, the purchase of the price will create a chance to share the potential stock market when the risk is only a small part of the stock market value. In contrast, if you foresee the decline, buying a falling option allows you to protect the stock market falling risk without restricting the possibility of profit. Purchase option makes you can seek a trading status based on your foresee of the market, not only get the benefits, also limit the risk, and protect yourself. Look more to buy a XYZ July 50 to give you the right, and purchase 100 shares XYZ ordinary stocks at all times before the July contract expires. When the price of the underlying stock is appreciated, the right to purchase stocks at fixed prices is particularly valuable. Assume that when you buy your option, the price of the underlying stock is $ 50, your payment is 31/2 (or said, $ 350). If your option is invalid, the price of XYZ stocks rises to $ 55, the right is raised to 51/2, how to deal with your premium - IN-Money Option, you have two options:
You can fulfill your contract with a total of $ 5,350 (including option Rights), 100 shares XYZ stocks per share, ie, turn over to $ 5,500 prices, throwing $ 150 Net profit. You can sell this hand in $ 550, settle your position, charge the 200 dollar difference between the money you pay and the money you pay. In this case, you get 57% (200/350) profit, and in the same price change, if you buy a shares directly, your profit is only 10% (55-50 / 50). The profitability of similar examples depends on how the time left before the date is expected to affect the rights. Remember, when an option is close to its contract expiration date, its time value has fallen sharply. Do you want to have the wishes of the stock, it also affects your decision. If the price of XYZ stocks fell to $ 45, the option of options fell to 7/8, you can sell your options, and partially offset your money. Otherwise, this option will be invalidated in one text, and your loss will be a total of $ 350. In most cases, the loss in the option is less than the loss of the underlying stock, where the example is $ 262.50 ratio of $ 500. Look at the fell of the stock price, and the decline is provided with a method of more attractive than stock shorts. When you purchase the fall option, you know your risk, the risk is decided in advance. Your biggest loss is the cost of buying this option. If you make stocks, your potential loss is unlimited in the situation of rising prices. Another benefit when buying a falling option comes from this fact: When you buy a decline option, you have already paid the price in cash. If you have a stock, you must have a margin account. If you have a shorter list if you have additional margin requirements, you will like to force you to roll in advance, although the position is also profitable. As a buyer who looks down the option, you can keep your position without increasing any risk before the contract expires. Buy an XYZ July 50 to show you the right, and sell 100 shares XYZ ordinary stocks at all times before the July contract expires. When the price of the stock is depreciated, the right to sell stocks at fixed prices is particularly valuable. Assume that when you buy your option, the price of the underlying stock is a $ 50, and your payment is 4 (or said, 400 US dollars). If the price of XYZ stocks fell to $ 45 before July, the right gold rose to 6, in how to deal with your premium (in-the-money), you have two options:
You can buy 100 shares for $ 45 XYZ stocks per share, that is, transferred with $ 50 in the stock market in the stock market, gain $ 500's rights to minus $ 400 in $ 500. gold). You can sell this hand contract, charge the difference between the money you pay and the money you pay. In this example, the difference is $ 200. If the holder of the option decides that it does not take action, the maximum loss to use this policy is the entire fee of the supreme option, that is, $ 400. The profitability of similar examples depends on how the time left before the date is expected to affect the rights. Remember, when an option is close to its contract expiration date, its time value has fallen sharply. If the price of XYZ stocks rose to $ 55, the option of the option has fallen to 11/2, and your options become an option - Out-of-Money. You can still sell your option with $ 150, partly offset your original amount of money. In most cases, the overhead of this strategy is smaller than you do directly to XYZ empty instead of buying the loss of falling options. In this example is $ 250 to $ 500. This strategy allows you to profit from a drop in price movement, while the loss will be limited to the routing of the money once the price increases. When reading the introduction here, you should read the basic expenditure documents of the "Characteristics and Risk of Standardization Options" at the same time. This document reviews the purpose and risk of optional transactions. Although there are many advantages, options are not suitable for all investors. Before reading and understanding the risk revealing document, you should not enter the optional transaction. This file can be obtained from the website of the Chicago Option Exchange. The option allows you to join the price movement without having to prepare a lot of money required to buy stocks. Options can also be used to support a set of stock positions, which is more favorable for sales prices than the current market price, or earn money income in the case of selling options. Whether you are a conservative or focused investor, or even a short-term, active trader, your investment consultant can help you choose a suitable option strategy for your proper. What is introduced here is some of the most basic strategies. They are the foundation stone of existing other more complex strategies. Although there are many advantages, options involve risk are not suitable for everyone. Investors who want to use options should have a careful planning of investment objectives for his special financial situation, as well as implementation of these goals. To successfully use options, you must have a determination to understand what is option, how is the option to work, and what is the risk of special option strategies. Understand the basic principles, coupled with other information and assistance from many brokerage companies, online companies and other sources, and seeking new investment tools in today's market, will find the challenging optional transactions Always move quickly and have potential benefits. Options involve risks, not suitable for all investors. Everyone must receive a copy before buying and selling options.
Characteristics and Risk of Standardization Options "(ODD). ODD and options clearing company's" Scripting "can be from your broker, or call 1-888-Options, or from the option liquidation company (The Options Clearing Corporation ONE North Wacker Drive Suite 500, Chicago, Illinois 60606, USA) is obtained. The information provided on this website is completely for the purpose of providing education and information to the public, so it should not be considered complete, accurate or latest. Many problems discussed here, but also subject to specific legal regulations, as well as restrictions on the provisions of the decree should be referred to, and there will be failed to reflect changes in this website information. No web page content should not be It is considered to be a recommendation for the sale of securities or suggestions for investment. The advertisements of the Ni Sikago Options Exchange included in this website do not explain the recommendation of the advertisement, or for any product, service or website value. The use of this website must follow "Use Conditions". Anyone who intends to use this website must receive these attention and regulations.
