Introduction to options
The option is provided by the payment of the premium the right to buy or sell a security or commodity at a predetermined price within a certain period.
Introduction to options: the Conclusion of an option contract gives the right to buy or sell before the date of the expiration of any financial asset at the statutory value. As the asset can be futures, which unlike the option is obligatory for execution. The option does not bind the holder, i.e., the buyer of an option, the obligation to follow the terms of the contract, giving him the right to make an independent decision. If the exchange of option contract on futures has concluded the transaction of purchase and sale, the cost of which is equal to the exercise price.
For the purchase of futures are used options such as CALL, giving the right to sell the financial asset. Fulfilling the CALL option, the buyer of the option sells the right to buy a futures contract, and the seller of the option, respectively, on the sale of a futures contract.
Introduction to options PUT provide the right for sale of financial assets. The exercise of the option PUT implies the sale of a future buyer of the option or the purchase of a futures contract by the seller of the option.
Similarly, holders of futures, the holders of options may exercise the right to take back the transaction to close their positions, regardless of whether they are sellers or buyers.
When you select the option always take into account two prices: own price of an option or award and the exercise price or strike. The payment of the award shall be made in favor of the seller of the option the buyer directly at the moment of conclusion of the transaction in exchange for the right to execute the option in the future. The size of the premium is established in the course of trading.
In contrast to the premium exercise price (strike) is determined by the exchange and is a standard value for each particular type of option. She captures the value of a futures contract, the option holder can buy or sell according to the option contract.
Hedgers and speculators have in their disposal a multitude of options strategies. Their application depend on the situation on the market, objectives and forecasts of a particular trader.
