In the first part of our series we took a look at what an Option is, including what makes up the value of an Option, the difference between a Call or a Put, and what risks are involved. They are traded during the regular ASX trading hours 10am — 4pm during weekdays only. They are not traded on weekends or on NSW public holidays.
To start trading Options; if you are going to be making your own decisions independently of a Broker you will need to have software that displays pricing and interest information in real time.
The ASX offers data free with a 20 minute delay, however it is not advised to use delayed data for trading. Most if not all software will come with a charting component that you can use for technical analysis more on this in a later article and with news and reporting announcements that would help you form your fundamental analysis. From there you will be able to gather most of the information you need to make an informed decision, and have an understanding on the price and potential profits.
Because Options are regulated there are several other entities involved to insure that the process is honest and that all parties are protected. When you have done your due diligence and identified an Option that you would like to purchase the first step is for you to call your broker or place an order via their online order pad. Depending on what service you have arranged with your broker, you could consult them on your trade and they would offer their advice based on their outlook and experience.
Otherwise they can place the trade on your behalf usually for a small fee. There are numerous market makers that compete against each other so that you get competitive pricing. So in summary, the robustness of the Australian Options trading market relies on the ASX providing a transparent and regulatory role in all activity, ASX Clear being able to guarantee each and every trade, the Market Maker in providing liquidity and competitive pricing and your broker being able to offer their advice and experience, and to help you place your trade.
They are regulated, transparent, are guaranteed by ASX Clear and have a healthy, competitive pricing environment. Binary options are also options, however in Australia they are not traded on an exchange such as the ASX and are instead traded through independent brokers. This could be another trader or the independent broker themselves.
The other key difference is that the loss or return of a trade is fixed, and that they are generally settled over a short time period. ETOs however have the benefit of a profit that is reflective of the market price movement relative to the strike price, and being able to profit if the market value moves sideways.
In short, ETOs are a regulated and transparent form of trading options with the ability to trade short term or for the long term. Binary options are not regulated and traded off the exchange for very short term positions. A Call Option or a Put Option will allow you to profit when the market moves in one direction, up or down. There are strategies that will also allow you to profit if the market also moves sideways — giving you the opportunity to profit in two of three possible directions.
How Options are Traded in Australia In the first part of our series we took a look at what an Option is, including what makes up the value of an Option, the difference between a Call or a Put, and what risks are involved.
Where and how are Options traded? Please enter a valid Email Address. Please read our Financial Services Guide before you continue. Online Stock Market Education. General Advice and Other Warnings.More...