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B. Exercise (settlement involves stock delivery).
Exercise also involves paying a commission on the
purchase of stock. Index Options: settlement in CASH
1. "OEX" S&P 100: Value is exercise price times 100
2. Options available on all major market indexes
3. Advantages of Index Option Trading
b. Cash settlement permits trading w/o necessity to make/take
Options cover the market as a whole.
Options All Rights Reserved Dr David P Echevarria 10 TYPES OF OPTIONS
C. Trading Costs
3. Clearing fees
Broker commissions All Rights Reserved Dr David P Echevarria 11 REGULATION OF OPTIONS MARKETS
A. SEC is primary regulator for options on
stocks, foreign currencies, and indexes.
C. CFTC is primary regulator for futures options.
CFTC Exchanges also have rules, particularly in
regards to capital requirements.
OCC also has certain rules for member firms
to follow. All Rights Reserved Dr David P Echevarria 12 MARGIN REQU...
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- Fall '09