ETO_fact_sheet - Exchange Traded Options Fact Sheet ASX -...

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Unformatted text preview: Exchange Traded Options Fact Sheet ASX - Options Growth 3 6 9 12 15 18 21 1 9 8 4 1 9 8 5 1 9 8 6 1 9 8 7 1 9 8 8 1 9 8 9 1 9 9 1 9 9 1 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 2 1 2 2 2 3 2 4 2 5 ( * ) Options Volume (millions) 500 1000 1500 2000 2500 3000 3500 4000 4500 All Ords Index Options Volume All Ords Index What are Exchange Traded Options? Exchange Traded Options (ETOs) are versatile, short dated contracts traded over the top 100 stocks and several major indices. They are now used by long term investors to manage risk, when buying shares on margin, in Self Managed Super Funds (SMSF) and by speculators. Options can be used in a variety of ways to prot from a rise or fall in prices. The most basic strategies employ put and call options as a low cost means of getting exposure to shares or an index. Options can also be used to offer protection from a decline in the market price or as a hedge against rising prices. They can enable you to buy shares at a lower price, sell shares at a higher price, or create additional income against a portfolio. You can also use option strategies to prot from a move in price regardless of market direction. When used as part of a portfolio, options can reduce volatility and enhance returns. This versatility makes options popular with investors looking to trade short-term moves as well as build and protect long-term wealth. Their unique risk / return characteristics mean they probably have a role to play in your portfolio too, whatever its size. Options Strategies By combining different options, or stock with options, you can create a wide range of strategies. Whether you are a conservative or growth-oriented investor, or even a short-term, aggressive trader, your broker can help you select an appropriate options strategy. The strategies presented here include some of the most popular and illustrate the possibilities. Risks Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of the Understanding Options Trading booklet. Copies of this document are available from your broker or ASX. This document discusses exchange-traded options issued by ASX and is intended for your broker or ASX....
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This note was uploaded on 08/30/2009 for the course FINM 3405 taught by Professor Philipgray during the Three '09 term at Queensland.

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ETO_fact_sheet - Exchange Traded Options Fact Sheet ASX -...

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