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KIC000106 - Backg I Markets used to trade options Ci The...

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Unformatted text preview: Backg I Markets used to trade options Ci The OBOE: I is the most important exchange tor trading options I Servosas themukettoroptionsanmoeo than 1500 diner-9mm I Lists standardized option: I Apoountofor abou: 51 percent at all optiontrading Cl Options are also traded on the AMEX. Philadelphia Stock Exchange, Pacific Stock Exchange, and the Intamational Securities Exchange Background on Options (cont'd) I Markets used to trade options (cont’d) El Listing requirements I Each exchange has iteown requirements I one key requirement is a minimum trading volume of the underlying stocks U Role of the Options Clearing Corporation (OCC) ‘ I $8300 serves esoguoramaronopttonoontractstredodin :7. U Regulation of options trading I miSEC and the various option surcharges regulate option no I Regulations: d Areintondodloenmrefirlndordeflytflininn o AWN prwent insidertroring o Mommtoprewmlariolmm Imnmfloorbrokeu ackground on Options (oont'd) How option trades are executed a Floor brokers execute transactions desired by investors I Some orders are owned eieotwnioollywrthout a floor bmkef D Market-makers: I Can emanate stock option wansocfionsfor customers I Trade options on their own account I Maytadlitetsamyorderforomwstomeranda aailorder for a dtfl‘erent customer I Earn the di‘i'fereme between the bid prion and the ask prion formulation ....,__. rat [— ‘T‘fi WT, .1 _._._. “T T ’i ...
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