European Style Stock Options.
Underlyings and minumum lots.
Stock option contracts are quoted in Euro.
Cash settled on the CC&G open day following the trading day by Cassa di Compensazione e Garanzia.
The value of the contract is determined by the product of the strike price (in Euro) and the respective lot.
Example: if the price of an option on XY with strike price of 31.45 € is equal to 0.6500 €, the contract value is 31.45 € x 500 =15.725 €
Option price (premium)
Equal to the value of the option premium multiplied by the respective lot.
Example: if the price of an option on XY with strike price of 31.45 € is equal to 0.6500 €, the premium is 0.6500 € x 500 = 325 €
Up to a premium value equal to €0,005 the tick size is equal to €0,0001, for the premium value greater than €0,005 the tick size is equal to € 0,0005.
10 expiries: the 2 nearest monthly expiries, the 4 following quarterly expiries of the 'March, June, September and December' cycle thereafter, and the 4 following semi-annual expiries of the 'June and December' cycle thereafter. A new monthly (quarterly or six-month) expiry is quoted on the first trading day following expiry.
The contract expires on the third Friday of the expiration month at 8.15 am. If the Exchange is closed that day, the contract expires on the first trading day preceding that day.
Last trading day.
Trading in any contract closes the day before the expiry at 5.50pm.
Daily closing prices.
The daily closing price is established by Cassa di Compensazione e Garanzia.
The settlement price is the closing auction price of the underlying share on the last trading day.
Exercising an option.
In-the-money options are exercised automatically on expiry day.
Cash settlement takes place in the manner and time limits established by the provisions of the CC&G, within the existing Equity Derivatives Section for the following underlyings: ENEL, ENI, G, ISP, TIT and UCG.
Physically settled on the second open TARGET calendar day following the early exercise or the expiry day through Cassa di Compensazione e Garanzia is possible for the following underlyings: CNHI, ENEL, ENI, EXO, FCA, G, ISP, ISPR, MB, SRG, TIT, TITR, UBI and UCG.
Limit on number of positions open or exercised.
Exercise prices are generated at intervals as shown in the table below:
What are European style options?
European Style Options.
Difference Between American and European Options.
Definition of a European Call Option:
A European call option is an option for the right to buy a stock or an index at a certain price ON a certain date. Notice the phrase "ON a certain date." This "European style call option" differs from the "American style call option" that can be exercised at any point "BY a certain date."
Eurpoean vs American Option Examples.
In other words, the difference between European calls options and American calls options is that European style call options can be exercised ONLY on the expiration date while the American style call options can be exercised at any time PRIOR to their expiration date.
Most stock or equity options in the U. S. are American Style, whereas most index options traded in the U. S. are European style. Since you can't actually "exercise an index option" and buy the index, index options are cash-settled. Cash settled means that your broker simply deposits the "in the money" amount at expiration.
What does this European style option mean for the trader? It means that the you are concerned ONLY with the price of the stock or index at its expiration. European style options tend to be cheaper than American style options because if a stock spikes prior to expiration, an American style call option trader can capitalize on that increase in value, whereas the European style call trader has to hope the price spike holds until expiration.
When to buy a European Call Option:
If you think a stock price or index is going to go up , then you should buy a call option. Unfortunately, you don't get to choose if you want to buy a European style option or an American style option--that decision is made by the exchange that the option trades on. Most index options in the U. S are European style as you can see from the chart below:
Example of a European Call Option:
If you bought a S&P500 Index option, as you can see from the chart above, it would be a European style option. That means that you can only exercise the option on the expiration date. Of course it is still an option, which means that you have the right but not the obligation to exercise it.
Obviously, if you have a call option and the Index closes below the strike price on the expiration date then you would not exercise it and that option would just expire worthless. Likewise, if you have a put option on the Index and the Index closes above the strike price on the expiration date then you would not exercise it and that option would just expire worthless.
Notice in the chart above that the S&P500 Index (SPX)is European style while the S&P100 (OEX) is American style.
Important Tip: In the U. S., most equity and index option contracts expire on the 3rd Friday of the month. Also, note that in the U. S. most contracts allow you to exercise your option at any time prior to the expiration date. In contrast, most European options only allow you to exercise the option on the expiration date!
Here are the top 10 option concepts you should understand before making your first real trade:
Options Resources and Links.
Options trade on the Chicago Board of Options Exchange and the prices are reported by the Option Pricing Reporting Authority (OPRA):
Option Styles.
Options come in different styles. The style relates to when the options can be exercised. The two styles are:
American-Style: At this point in time all stock options traded on the marketplaces are American-style. This means that the option holder can exercise the option at any time from purchase until the expiration date. European-Style: A European-style option can only be exercised at expiration. Several index options traded on the marketplaces are European-style.
American-style options are the most common and will be used in all examples in this text.
Where To Trade Options.
Options are regulated by the Securities and Exchange Commission (SEC) and are traded by individuals, institutional investors and professional traders in the following securities market places:
Buy and sell orders for options contracts are transacted through brokers. Options' performance can be tracked through the market places on which they trade, in financial tables on many major newspapers, as well as on NASDAQ.
Get Options Quotes.
Enter a company name or symbol below to view its options chain sheet:
Options Center Home.
Edit Favorites.
Enter up to 25 symbols separated by commas or spaces in the text box below. These symbols will be available during your session for use on applicable pages.
Customize your NASDAQ experience.
Select the background color of your choice:
Select a default target page for your quote search:
Please confirm your selection:
You have selected to change your default setting for the Quote Search. This will now be your default target page; unless you change your configuration again, or you delete your cookies. Are you sure you want to change your settings?
Please disable your ad blocker (or update your settings to ensure that javascript and cookies are enabled), so that we can continue to provide you with the first-rate market news and data you've come to expect from us.
Investors Guide to Trading European Options.
Options on stocks and exchange traded funds (ETFs) are American style options and trade until the closing bell rings on the 3rd Friday of the month specified in the option contract. They expire early the next morning. If you own an American style option, it’s automatically exercised any time the option is in the money by one cent or higher. If you are short an option, you learn whether you have been assigned an exercise notice before the market opens for trading the next business day – or Sunday, if you have online access to your account.
When you exercise a call option, you buy 100 shares of the specified stock, paying the strike price per share.
When you exercise a put option, you sell 100shares at the strike price.
This is pretty simple stuff and although option rookies may have questions, most investors understand the process.
Some of the most actively traded options are European style . Investors must be aware of the differences between European and American options. This is one of those details that you ignore at your peril.
Some of the most popular European options are: SPX, NDX, and RUT.
1. European options cannot be exercised prior to expiration da y, whereas American style options can be exercised any time before the option expires.
This property of European options benefits option sellers. When you trade equity options, it’s seldom a problem if you are assigned an exercise notice before expiration arrives. The investor who sold calls becomes short stock instead of options. Unless your account is too small to carry a short stock, there’s no inconvenience.
But, it’s different with index options. Be aware that OEX options are American style and if you sell options – even when part of a spread, early assignment can be a big problem – and it’s much safer to avoid trading OEX options. If you look at your account one morning and discover that you have been assigned OEX options, then you repurchased the options, paying the intrinsic value, as of last night’s closing index price. There’s nothing you can do about it. If you owned a spread position, one part of the spread has been covered. This is a very bad situation. Avoid it.
2. European options settle in cash. No stock changes hands. When you exercise European style options, you receive the cash value of that option. That’s very convenient for everyone involved in the transaction. Can you imagine exercising an SPX option and buying shares for each of the companies of the S&P 500 Index? Cash settlement works like a charm.
You own 4 SPX Oct 810 calls. The price you paid is not relevant.
The official closing price (called the settlement price) of SPX for the October expiration is 816.74. Thus, the 810 call is in the money by 6.74 points. [Similarly the Oct 820 put is in the money by 3.26 points.]
Your account is credited with $674 for each option you own, or $2,696 – and the option is cancelled. This is effectively the same as selling your options at parity (intrinsic value).
If you are short SPX Oct 810 calls, $674 per option, is removed from your accou nt.
If the option is out of the money, it has no value, and expires worthless.
3. Settlement price. With American style options, the settlement price is the closing price. For stocks and ETFs, that’s the last trade before the market closes. But it’s very different with European options and the method used to determine the settlement price is often misunderstood, resulting in large, unexpected losses (or gains) for the unwary investor. As a result, you will often hear of accusations of wrongdoing as those who lost money violently protest. An understanding of the rules is important.
Options stop trading when the market closes on Thursday afternoon, one day prior to the 3rd Friday. Thursday’s closing index price is unimportant. It does not count one iota. Friday morning, the market opens and stocks begin trading. SPX has 500 stocks, RUT has 2000 stocks, DJX has only 30 stocks (Dow Jones Industrial Average). For each stock in an index, the opening price is determined. When each of the stocks has opened – and some stocks may not opens for several hours – the settlement value of the index is calculated as if each stock is simultaneously trading at its opening price. Note: The settlement value is never a real world value. It’s hypothetical. It’s based on a situation that is not real. Thus, it’s very possible that the settlement value will be higher than the published high price for the day. It’s also possible that the settlement price can be lower than the lowest price of the index published on Friday. Why this is crucial: If you are investor who sold (and retains a short position) SPX Oct 810 call, and Thursday’s closing price for SPX is 808, you may believe that the index settlement price is 808 and that the options expired worthless. That’s incorrect.
An investor, who learns that the options are still alive, recognizes there may be a problem. Assume the market opens higher Friday morning and that the first posted SPX price is 811. Our investor is not happy, but the option is only in the money by $1, and it costs $100 apiece to buy them back. That’s not so terrible.
Imagine the anguish when the settlement price is posted (approximately 1PM, Eastern Time) and the price is 816.74. “That’s impossible.” But it’s not impossible. It happens frequently and the apparently worthless options cost $674 apiece.
This cannot happen to you if you remember to buy back your short European options Thursday afternoon (or earlier). It’s very risky to depend on the settlement price.
Mark Wolfinger is a 20 year CBOE options veteran and is the writer for the blog Options for Rookies Premium. He also is the author of the book, The Rookie’s Guide to Options.
Join Over 22,000 Investors.
Receive Weekly Market Recaps directly in your inbox!
Log, Store, and Analyze Your Trades.
Stock Market Recaps.
Join over 22,000 investors and sign up today for our free weekly newsletter.
Most Popular.
Latest Market Recaps.
©2017 Reink Media Group LLC · All Rights Reserved.
Комментариев нет:
Отправить комментарий