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Open interest also gives key information regarding the liquidity of an option. If there is no open interest for an option, there is no secondary market for that option. 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 ...
An alternate name is "alligator spread," derived from the large number of trades required to open and close them "eating" one's profit via commission fees. Box spreads are usually only opened with European options, whose exercise is not allowed until the option's expiration. Most other styles of options, such as American, are less suitable ...
S&P 500 Futures are financial futures which allow an investor to hedge with or speculate on the future value of various components of the S&P 500 Index market index.S&P 500 futures contracts were first introduced by the Chicago Mercantile Exchange in 1982.
Open interest (futures) is the number of "open" contracts or open interest of derivatives in the futures market. Open interest in a derivative is the sum of all contracts that have not expired, been exercised or physically delivered. Moreover, the open interest is the number of long positions or, equivalently, the number of short positions.
Selling a Bearish option is also another type of strategy that gives the trader a "credit". This does require a margin account. The most bearish of options trading strategies is the simple put buying or selling strategy utilized by most options traders. The market can make steep downward moves.
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.
A call option on a stock index gives you the right to buy the index, and a put option on a stock index gives you the right to sell the index. Options on stock indexes are similar to exchange-traded funds (ETFs), the difference being that ETF values change throughout the day whereas the value on stock index options change at the end of each ...
Considering the DJIA as an example, the basis of calculating implied open is the price of a "DJX index option futures contract".This is not the price of the DJIA itself but rather the current ticker price of an option issued by the Chicago Board Options Exchange.
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