option trading in future

Jun 28th, 2015
Studypool Tutor
A. T. Still University
Price: $25 USD

Tutor description

Outlining your options The advent of trading in options in India opens up exciting investment opportunities with a new vocabulary and understanding. Should you “straddle” or “strangle?” Or perhaps create your own “combination?” By taking up one option strategy every week, we hope PUT & CALL will clarify such questions and more. We will correlate theory to real-world examples from the Indian markets, complete with an Excel worksheet to instantly calculate payoffs. For starters, here’s how to straddle the new world of options.

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Currency Option ContractsTerminologyOptions Contract: An option is a contract that gives the holder theright (Not the Obligation) to Buy or sell currency in the future for apre specified price.Option writer: The option writer is the person or institution that sellsthe option.Option Premium: Is the option price, it is what the buyer pays,upfront, for the right to Buy/Sell currency in the future at a set price.Maturity Date: also call the Expiration Date or Expiry. This is thedate when the option expires.Exercise: If the option holder decides to execute the option and buyor sell currency at the contract price, then the option is said to beexercised.Early Exercise: Refers to an American option being exercisedbefore the maturity date.TerminologyStrike Price: The FX rate specified in the contract that the optionholder can buy or sell currency at. Option Types:1. Call Option: Gives the holder the right to BUY the specifiedcurrency at the strike price on or before the maturity date.2. Put Option: Gives the option holder the right to sell thespecified currency at the strike price, on or before the maturitydate3. European Option: Gives the option holder the right to buy/sellthe currency at but not before the maturity date.4. American Option: Gives the option holder the right to buy/sellcurrency any time before or on the maturity date.Types of options GraphicallyAmerican CallOptionsAmericanOptionsAmerican PutOp

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