In this lesson we provide a brief introduction to options contracts. First, we discuss what an option contract actually is. We then move on to an introduction to some basic characteristics of options before providing a couple of simple examples of options. Lastly, we...
In this lesson we provide a brief overview of the structure of the global options market including over-the-counter options and the exchange-listed options.
Almost anything with a random outcome can have an option on it. In this reading we will learn about the many types of options, which are distinguished by the nature of the underlying.
The most important concepts of option pricing are discussed in this lesson. These are principles of option prices that are regulated by an investor’s logic.
In this reading we introduce discrete-time option pricing in the form of the binomial model.
In this reading we move to a continuous-time world, where we use the well-known Black-Scholes model to price options.
Selling puts is not more risky than investing in the underlying security. It can even be argued that it is less risky.
There is no difference in the payoff profile between selling a put and a covered call position in the same underlying security.
The Shiller P/E is potentially a better market valuation indicator compared to trailing 12 months P/E ratio because it eliminates fluctuation of the ratio caused by the variation of profit margins during business cycles.
CBOE offers regular and global trading hours for S&P 500 Index options (SPX) which are used globally for broad market exposure. The Sensa Investments algorithms on our SPX based products run during regular trading hours from 8:30 AM to 3.00 PM Chicago time.
Options margin is the cash or securities an investor must deposit in his account as collateral before writing (selling) options. Margin requirements are established by the Federal Reserve Board in Regulation T and varies based on the type of option.
