Options and Futures

Posted on October 20th, 2008 by admin, under Forex Bonds Options and Futures.

Options and Futures

Short Call Option

Option contracts is a contract which, in exchange for a premium, gives the purchaser the right (no obligation) to buy or sell financial assets at a price at a specified date (expiration date) or earlier.

Futures contract is a contract to buy or sell (futures) or that represent rights (options) to buy or sell a foreign currency at a particular price within a specified period of time.

The main difference between the options and futures is that futures is the obligation, as an option is the right

Options is the right either to buy or to sell an asset (in our case - futures) at a fixed price at any time during a certain period of time.

An option that gives the right to buy an asset - futures, known as CALL; option, which gives the right to sell futures, is called PUT.

At any given time, the buyer (holder) of option can fulfill it. In this case, recorded the sale of a futures contract at a price equal to the price performance option, this means that the option shares on the futures contract.

In the case of the execution of CALL option buyer of an option becomes buyer of futures and the seller of an option becomes the seller of futures. In the case of execution of PUT option buyer the option becomes a seller of futures and option seller becomes a buyer of futures.

In addition to the buyer’s ability to execute the option at any time, there is also an opportunity for both the buyer and the seller of option to close its position through the backward transaction (as futures).
One must distinguish the price for the option execution and the price of the option itself (premium).

When a contract price of the option (premium) the buyer of the option always pays the seller as a reward for the right to continue to execute this option. Price is an option as a result of stock market trading.

Price of performance (Strike) is the price at which the option entitles the holder an option to buy or sell futures underlying the option, the price performance are standard and are established by exchange for each option contract.
Thus, the design option includes a choice of one, but two prices. The Bidder first determines the appropriate option to him at the cost of execution, and then in the bidding process is determined by the price of the option (premium).

Option strategies can be used in any situation in the market and any predictions as to make market participants. There are many strategies for the use of stock options - both for hedging or speculation.

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Investing basics

Posted on June 18th, 2008 by admin, under Forex Bonds Options and Futures.

In this section we will view investing to financial instruments – deposits, promissory instruments (actions, bonds), and so-called derivative instruments (futures and options – commodity, index etc.)

This section is intended for those who are going to invest in the amount of 10000 dollars and more and more concerned with reducing risk than ultra-high returns. In so doing, many of you do not have a serious investment experience and do not understand all the “pitfalls” of the process.In our time Internet gives the real opportunity for anyone, not even being a professional, multiply their funds by investing them in world financial markets In this section we will view investing to financial instruments – deposits, promissory instruments (actions, bonds), and so-called derivative instruments (futures and options – commodity, index etc.)

This section is intended for those who are going to invest in the amount of 10000 dollars and more and more concerned with reducing risk than ultra-high returns. In so doing, many of you do not have a serious investment experience and do not understand all the “pitfalls” of the process.

In our time Internet gives the real opportunity for anyone, not even even being a professional, multiply their funds by investing them in world financial markets.

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