Options University Blog

London International Financial Futures And Options Exchange (LIFFE)

admin — Tue, 07 Oct 2008 08:40:35 +0000

London International Financial Futures And Options Exchange (LIFFE)

There took an exchange in the futures and in the options of the city London and England which was modeled only after the Chicago Board of Trade and the Chicago Mercantile Exchange. Like the other counterparts of America, even this exchange used to tact with futures, options and with other merchandise commodities. Conversely, in the (more…)

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Tags: electronic trading stage, Financial Futures, LIFFE, Options Exchange

What is Listed Option

admin — Mon, 06 Oct 2008 08:33:34 +0000

What is Listed Option?

These are options traded on registered stock exchanges like Euronet or Chicago Board Options Exchange (CBOE) and span over securities like common stocks, market indexes, ETFs and commodities. Exercise prices along with the expiration dates are available for all listed stock options. At times, these are also called “exchange-traded options”.
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Tags: American style option, European style option, listed options

Limit Order

admin — Sun, 05 Oct 2008 08:26:23 +0000

Limit Order is an order requested to a broker regarding the purchase or sale of specified number of shares at a determined price or higher than that is called as Limit Order. You can thus determine the amount of time for which the order placed can stay outstanding before it stands void.

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What is Leg in Options Trading

admin — Sat, 04 Oct 2008 08:21:01 +0000

1. Leg is described as an entry technique put in place by the brokers for execution of orders. While executing orders, if the broker executes it in different phases, time delays heighten the risk for a price swings causing a Leg.

2. Varied aspects associated with a combination option are often described as Leg
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Last Trading Day

admin — Fri, 03 Oct 2008 08:18:03 +0000

This day indicates the closing day on which an option or a futures contract can be traded. This is a day on which the trading finishes before the underlying asset is delivered.

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What is Lapse?

admin — Thu, 02 Oct 2008 08:09:21 +0000

Lapse
The termination of a right or a privilege on a policy due to the passage of time or due to inactivity is denoted by the term lapse. A party that fails to fulfill the set conditions on an agreement or a contract usually looses the right on the policy and this is when the policy lapses.
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Tags: option contract, option expires or lapses

Lambda

admin — Thu, 02 Oct 2008 02:59:21 +0000

Lambda is a ratio denoting the change occurring in the price of an option as compared to a 1% change the volatility of the option.

In other words, this is nothing but a partial derivative of an option’s price as compared to its volatility. Kappa, Vega and sigma are the synonyms for Lambda.

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Tags: Kappa, sigma, synonyms for Lambda, Vega, volatility

Ladder Option

admin — Wed, 01 Oct 2008 02:49:31 +0000

Ladder Option is an option that provides for locking in the security gain as soon as the underlying security reaches the predetermined levels of price. Thus it guarantees some amount of profit on the investment even if the price of the underlying security might fall below the determined level before the expiration of the option.
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Tags: expiration of the option, ladder call option, Ladder option

How Does Fungibility Applied in Options Market?

admin — Tue, 30 Sep 2008 02:35:22 +0000

Any asset, commodity or property which indicates the interchangeability with another similar type of asset or commodity is termed as Fungible. Such fungible assets help in simplifying the trade due to an assumption of everyone valuing goods of same class as same value.

How Does Fungibility Applied in Options Market?
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Tags: commodites, Fungibility, fungible stocks

Fugit

admin — Mon, 29 Sep 2008 02:35:20 +0000

The time left with investor until the option exercise remains beneficial for the investor.
Likelihood of the use of American style option before its expiry is termed as fugit.

A Berkeley expert named Mark German used binomial trees and created this concept by studying the optimal period to exercise an American option.

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Tags: American option, divedend date, fugit