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When options have large open interest, they have a large number of buyers and sellers. An active secondary market will increase the odds of getting option orders filled at good prices. All other things being equal, the larger the open interest, the easier it will be to trade that option at a reasonable spread between the bid and ask.
The terms of an OTC option are unrestricted and may be individually tailored to meet any business need. In general, the option writer is a well-capitalized institution (to prevent credit risk). Option types commonly traded over the counter include: Interest rate options; Currency cross rate options, and; Options on swaps or swaptions.
The same approach is used in valuing swaptions, [4] where the value of the underlying swap is also a function of the evolving interest rate. (Whereas these options are more commonly valued using lattice based models, as above, for path dependent interest rate derivatives – such as CMOs – simulation is the primary technique employed. [5])
Shares of Freeport-McMoRan (NYSE:FCX) saw some unusual options activity on Friday. Following the unusual option alert, the stock price moved down to $34.37. Sentiment: BEARISH Option Type: SWEEP ...
On Wednesday, shares of ONEOK (NYSE: OKE) saw unusual options activity. After the option alert, the stock price moved down to $33.06. * Sentiment: BULLISH * Option Type: TRADE * Trade Type: CALL ...
Beyond Meat (NASDAQ: BYND) shares experienced unusual options activity on Monday. The stock price moved up to $141.79 following the option alert. * Sentiment: BULLISH * Option Type: SWEEP * Trade ...
In finance, a price (premium) is paid or received for purchasing or selling options.This article discusses the calculation of this premium in general. For further detail, see: Mathematical finance § Derivatives pricing: the Q world for discussion of the mathematics; Financial engineering for the implementation; as well as Financial modeling § Quantitative finance generally.
Underlying deliverables: Options are used with stocks, while futures are used with a variety of other deliverables, including commodities, interest rates, currencies, metals and even the level of ...
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