Structure and function
Article Abstract:
The options market has grown rapidly since the 1970s and options are used for a wide range of purposes such as risk management and hedging. There are many different types of options, with put and call options being two of the most common. Put options give a right to sell at a set price, and call options give a right to buy stocks, and both types last for a given period. Screen based options trading should be introduced at LIFFE in the UK from 1998, and spreads should narrow as a result of this move.
Publication Name: Investors Chronicle
Subject: Business
ISSN: 0261-3115
Year: 1997
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A tight rein on risk
Article Abstract:
Some professionals argue that the function of traded options is to reduce risk levels. They can be used to protect as a type of insurance against stock price falls, or to benefit from market rises. Investors should ensure that they are covered when selling calls. A number of combinations can be attempted both to provide insurance and to provide an income. Investors should carefully define their aims, and assess what is likely to occur with trends.
Publication Name: Investors Chronicle
Subject: Business
ISSN: 0261-3115
Year: 1998
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What happens if...
Article Abstract:
Investors should find a good broker if they wish to become involved in traded options. Stop loss limits are one way of avoiding losses, though markets may move rapdily and brokers may not accpet these limits. Warning signals of a deterioration in markets may be visible with hindsight, and investors should study markets carefully before taking decisions. Liquidity has been provided by people saving for pensions, but bear markets may still develop.
Publication Name: Investors Chronicle
Subject: Business
ISSN: 0261-3115
Year: 1998
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