What is an exchange traded option. An option traded and cleared on an organised securities or derivatives exchange. Such options are usually, but not always, standardised by strike, maturity and underlying.

What is an exchange traded option

What is an Exchange Traded Index Option

What is an exchange traded option. In finance, an option is a contract which gives the buyer the right, but not the obligation, to buy or sell an underlying asset or instrument at a specified strike price on a specified date, depending on the form of the option. The strike price may be set by reference to the spot.

What is an exchange traded option


Exchange Traded Options ETOs are a derivative security which means their value is derived from another asset, typically a share or stock market index. An ETO gives you the right but not the obligation to buy or sell a given security at a certain price within a given time. Trading ETOs is risky and should not be attempted unless you have a sound understanding of their characteristics and the market they operate in. You can use ETOs to hedge or protect your share portfolio against a drop in value.

For example, buying put options over shares allows you to lock in a sale price during the life of the option, regardless of share price movements. If you buy a call option, the purchase price for the underlying share is locked in until the ETO expiry date. The initial outlay for an options contract is less than you would need if you were to invest directly in the underlying shares. Because your initial outlay is lower when you trade options, you can diversify your portfolio and gain broader exposure to a range of shares, or even a market index.

ETOs have a limited life span. ETOs are affected by movements in the underlying share or index. If the market moves against you, your ETOs may fall in price or become worthless at or before their expiry date. The high degree of leverage involved in many ETOs can work against you, multiplying losses if the market moves against you. As the seller of an ETO, you earn a premium.

Add cash to your account - watch the tutorial. Join Why nabtrade Investor solutions Close. Enter keywords to search. Close Log into nabtrade Unexpected error Unexpected error.

Please try again later. Temporary password has expired Temporary password has expired. Please select "Forgotten Password" to reset your password. Account disabled Account is disabled. Account locked Account locked. Please select "Forgotten Password" below to reset your password. Password Please enter a Password. Were you looking for? There are no recommendations Recent Searches You have no recent searches Reasons to invest in ETOs with nabtrade.

Stream live ASX data so you can make real time investment decisions. Enjoy great brokerage and a competitive high interest rate for your cash. About Exchange Traded Options. There are two main types of ETOs: Calls - the right to buy, and Puts - the right to sell.

Protection You can use ETOs to hedge or protect your share portfolio against a drop in value. Income Shareholders can earn income by selling call options over shares they already hold. Time to decide If you buy a call option, the purchase price for the underlying share is locked in until the ETO expiry date.

Leverage The initial outlay for an options contract is less than you would need if you were to invest directly in the underlying shares. Diversification Because your initial outlay is lower when you trade options, you can diversify your portfolio and gain broader exposure to a range of shares, or even a market index. Limited life span ETOs have a limited life span.

Market movements ETOs are affected by movements in the underlying share or index. Leverage The high degree of leverage involved in many ETOs can work against you, multiplying losses if the market moves against you. Next steps Get started with nabtrade Every new nabtrade customer receives: A domestic trading account An international trading account An integrated cash account Additional service options include: Get started today 1.

Switching from another broker? Funding options for ETOs. There are two ways to fund your investment: Add cash to your account Every nabtrade account comes with a linked cash account. How to place an order. How to add cash to your account.


More...

1357 1358 1359 1360 1361