2013

Nov
26

Stock options USA (NYSE,NASDAQ,AMEX)

 

access stock options USA (NYSE,NASDAQ,AMEX).

A listed option is a standardized contract, entitling its purchaser to buy or sell the underlying asset (us stocks) at a predetermined price on the date of exercise of the option.

Features of stock options:

  • stock tool with a transparent pricing mechanism;
  • a convenient tool to hedge against other open positions stock;
  • loyal Deposit requirements;
  • limited risks.

The advantages of trading stock options:

  • trade contracts are one of the largest optional sites – The Chicago Board options exchange (CBOE);
  • work through simple and easy to use trading platform
  • concurrent trade options, shares and ETF, the possibility of constructing complex strategies;
  • Deposit $500.

Trading conditions for options:

  • Shoulder 1:1.
  • Commission side of the transaction – $4.00.
  • Commission for the execution of the option on the date of expiration – $1.00.
  • The cost of connection is optional quotes – $19.00 / a month.
  • Uncovered sale of illegal.

Test the options on a demo account. To get started with options in the real market you need to open an account.

 

History options

The roots of modern options go back to the days of Ancient Greece. One of the first mentions of the use of options is found in the work of Aristotle, which describes an example of a successful speculation, made by another philosopher Thales. He wanted to prove, despite the poverty, the philosopher can easily earn money with the help of the mind, just not very interested in financial gain.

Thales, with her knowledge in meteorology, suggested, that the olive harvest next summer will be rich. Possessing a certain amount of money (very small), he rented a press for pressing oil from their owners in the cities Milet and Chios, which was not at all sure, that their services were needed in that period of time — that is, Thales acquired the right to use the press in future, but if you didn't want, I could not do this, losing the money paid.

When summer came and the harvest was rich indeed, Thales was able to make good money on granting the right to use rented presses for everyone.

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The authenticity of this history raises some researchers questioned (especially a lot of questions is the ability of a Thales to foretell the harvest of the olives for the next six months), a description of the details of the transaction are also not up to Kona clear, but often it is compared with the modern concept of put option (put option —read more about it further).

Another example of utilizing options in ancient times is contained in the Bible — in the story, Laban offered Jacob the right to marry his youngest daughter Rachel in exchange for seven years of service. This example illustrates the risk, encountered traders options in the early stages of development of this financial instrument — the probability of failure to perform obligations of one of the parties. As you know, after 7 years, Laban refused to give Rachel over to Jacob, recommending him to marry his daughter.

As in the case of futures, the options included in the turnover of, what farmers need to protect themselves from losses under crop failure, and Resellers of commodities could use these contracts to save money (at successful coincidence of circumstances).

The evolution of trade relations has led to the emergence of stock exchanges and speculative trading in asset the average century stock markets appeared in Europe (for example, in Antwerp), and in Asia — for example, Dojima rice exchange in Osaka.

A well-known example of the use of options and futures — the so-called period tulpenmanie in the Netherlands 1630-ies. Then the demand for Tulip bulbs was very high and exceeded the offer. Therefore, on the Amsterdam stock exchange traders could enter into contracts to purchase or sell the bulbs at a certain price — in the case of options, it was exactly right, but not the obligation, which is futures. Upon the occurrence of a specified date, the buyer/seller could exercise his right to buy or sell at a specified price, and might reconsider, without any action.

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The next stage of development of the options was the emergence of such contracts on shares on the London stock exchange in the 20-ies 19 century (although the first contract for goods was concluded at this exchange at the end 17 century). Trading volumes options on that period was very small, and in the US at the end of the century on some exchanges, such operations were generally prohibited.

To 1973 informed options trading was done in very small volumes (although some speculators like Jesse Livermore and tried to cash in on them). This year was founded Chicago Board options exchange CBOE, where it began an active trade instrument. Exchange launched trading standardized options contracts. Helped with the development of trade and the US government, allowing banks and insurance companies to include options in their portfolios.

What is the modern option

Currently under option refers to the right to buy or sell a specified asset (it is called basic) in the future at a certain price. Like we discussed in a previous material futures, one difference is that the futures contract is an obligation to perform the transaction within the specified period at a specified price, and the option is a right. The buyer of the option can the right to buy or sell an asset to take advantage of, and maybe not to do it. So, compared to futures, options are non-linear tool, allow stock traders to implement flexible strategies.

As futures, options are traded on the exchange, usually in the same sections . As the underlying asset options are typically used the same assets, as for the futures. In addition, the underlying asset of an option may be the future itself.

Similarly with futures, the option has a maturity date (expiry). By way of performance options are divided into American and European. American can be exercised at any time before the expiration date, and European only strictly to this date.

For ease of display all settings options typically they are traded through special interface in the terminal, called the options Board.

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How it works


Options are of two types — call (call option) and put (put option). Buyers of call options (they are called holders) acquire the right to buy the underlying asset in the future at a certain price — called the strike price. Accordingly, the sellers of call option (or subscribers) sell to the buyer such a right for a certain amount of money, call option premium. If the buyer decides to exercise their right, the seller will be obliged to deliver to him the underlying asset at a predetermined price, in return the money.

In the case of a put option, the holder acquires the right, on the contrary prodavt underlying asset in the future at a certain price, and the seller, accordingly, the buyer is the right to sell for money. If the buyer later decides to exercise their right, the seller of a put option is obliged to take from him the underlying asset and to pay the agreed amount.

It turns out, that one and the same underlying asset with the same maturity date it is possible to conclude four deals:

  • To buy the right to buy the asset;
  • To sell the right to buy an asset;
  • To buy the right to sell an asset;
  • To sell the right to sell the asset.


If at the time of occurrence of the expiration date of the market price of the underlying asset will increase (G>P), the income of the buyer of the call option will be:

DS= (R-P) Kh K-TS,


where p is the market price of an asset at the date of termination of the contract, P – the price of the asset, designated contract, the exercise price or strike price, K – number of assets under contract, C – the purchase price of the option (option premium).

If by the time of completion of the contract, the market value decreased (G<P), the owner of the option will refuse to purchase assets and thus lose the amount, equal to the option price: DS=-TS.

We illustrate on the example. Let's say an investor wants to enter into a option contract of the type put on sale 100 stock of an Issuer at a price 100 rubles apiece in six months, given, what is the current value of an asset is 120 rubles. Investor, buying an option, expects its stock price to drop over the next 6 months, the option seller, on the contrary, hoped, the price at least will not fall below 100 rubles.

Here are more at risk of the option seller (the subscriber) — if the stock price falls below 100 rubles, then buy the asset he will 100 rubles, although the actual price in the market may be already below. The income of the buyer of the option will be even more, because he will buy on the market cheap shares and sell them at a predetermined higher price and the second side of the transaction he will be forced to buy them.

As in the case of futures, as a mediator and guarantor of the performance by the transaction parties of their obligations is the exchange, which blocks on the accounts of the seller and the buyer margin, thus ensuring implementation of the stipulated conditions.

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Why do we need options

Options are used to profit from speculative operations, or to hedge risks. They allow the investor to limit the risk of financial loss only a certain amount, he pays for the option. At the same time, profit can be any. This distinguishes options from futures, where regardless of, whether justified expectations of the investor regarding the market situation, he is obliged to make the transaction on the agreed conditions at the agreed day.

Options are a risky type of investment, however, their advantage is, the risk is known in advance, the investor risks losing only the option price.

Thanks to this feature, options are very popular with the speculators (which bring to the market liquidity, as we wrote in our previous stories), and investors receive a flexible tool for building complex trading strategies.

Options have come a long way length in hundreds of years. Born in the world, which was quite different from the present, they evolved in order, to solve the problems of modern investors and traders. Now, due to the flexibility and the possibility of obtaining acceptable results, this financial instrument is located at the peak of popularity, and its use is constantly growing.

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