Organization of exchange trading in options. Organization of option trading. Options: work for profit

Options are a unique tool that allows, on the one hand, to effectively reduce risks on existing positions both in the derivatives market and in the stock market. And on the other hand, it is an asset that makes it possible to earn not only on the directional movement of stock instruments (on an increase when buying and on a decrease when selling), but also on movement in any direction, the market being in a sideways trend, or even if prices fail to reach certain levels.

You need to start learning options trading from the moment you buy the first stock (or futures), since options help control risk much more effectively than stop orders, and success in exchange trading depends on how much the trader is able to minimize risks.

At its core, an option is like insurance. Imagine that when buying shares, you can enter into an exchange contract for a period of one month on the possibility of selling back your shares at a predetermined price (the strike price), if the share price, for example, does not rise. Moreover, the cost of such an agreement will average 3-3.5% of the value of shares. If the price of the shares rises, then there is a profit on the shares, minus the cost of the option (since it is impractical to execute the sale at a lower price). Approximately similar role of “stock exchange insurance” is performed by options, by the way, their cost may be lower.

Organization of option trading

Options trading on the exchange takes place on the derivatives market, where futures contracts are also traded. Formation of profit / loss on options occurs on the principle of accrual / write-off of variation margin at 19:00, and transactions are concluded by reserving collateral (GA), just like when trading futures contracts. Options trading is also held from 10:00 to 23:50 according to the derivatives market schedule.

An option is the right to carry out a transaction with the underlying asset under predetermined conditions (according to the specification) until a certain date in the future (expiry date).

Rice. 1. Specification of an option on a futures contract on Gazprom shares

Futures are the underlying asset for options. In the derivatives market, options are presented for the same assets as futures: for stock indices, currencies, commodities, and the most liquid stocks. And since there is almost no difference between the dynamics of stocks and futures for these stocks, you can insure stock positions with an option on a futures.

Rice. 2. Comparison of the dynamics of shares and futures for Gazprom shares

Types of options and options for their use

There are two types of options: call (call) and put (put). A call option is a contract for the right to buy an asset up to a certain date in the future at a price and quantity determined at the current moment. A put option is a contract for the right to sell an asset before a certain date in the future at a price and quantity that is currently determined.

Those. if you bought a futures or stock and the price of the asset went down, then, having a put option (the right to sell), you can write off the existing depreciated asset at the price specified in the option - the so-called strike price.

Similarly, having a short position on an asset and a call option (the right to buy), you can close the position at the strike price in case of a negative movement in the price of the sold asset.

Information on options is presented in the form of option desks, where strike prices (at which futures transactions will be made) are presented in the center; in the green field on the left - call options; in the red box on the right are put options. Conversely, for each strike, option prices are presented: theoretical price (recommended by the exchange), demand ( best price demand) and supply (best offer price). The rest of the prices (not only the best ones, with indication of volumes) can be viewed in the glass of the corresponding option.

Rice. 3. Provision trade information on futures options on Gazprom shares

Buying options. It is worth saying that you can trade options without the underlying asset. In this case, the profit from the call option is formed when the price of the underlying asset rises above the strike price by values ​​higher than the value of the option itself. By how much the price exceeds the given value, this will be the profit on the call (you will have the right to buy the asset at a price lower than the current one). And there is not much difference in which way the price will rise. The price can first fall as deep as you like or increase immediately. It is necessary that the price rises before the expiration of the option (before the expiration date).

Rice. 4. Making a profit on a call option on a futures on Gazprom shares

To make a profit on a put option (the right to sell an asset), the price of the underlying asset must fall below the strike price by the value of the put itself. A decrease more than indicated will be a profit on the option (you will have the opportunity to sell more than the asset is worth at the moment). And there is not much difference in how this decrease will occur, it is necessary for the price to decrease before the expiration of the option.

Rice. 5. Making a profit on a put option on a futures on Gazprom shares

Sale of options. Options can not only be bought, but also sold, thereby earning on the asset not moving up to the strike price. If you believe that the market will not rise above a certain level (levels can be taken above the current price) before the expiration date, you can earn by selling a call option with the corresponding strike. If you believe that the asset will not fall in price below a certain level before the expiration date, then you can earn by selling a put option with the corresponding strike (the strike price can be taken below the market).

Rice. 6. Making a profit on a sold call option on a futures on Gazprom shares

Profit/risk of buyers/sellers of options. Thus, it turns out that the buyer and the seller of options are in different rights and opportunities. If the buyer of the option has the right to exercise his contract (he may or may not exercise this right, for example, if it is inappropriate), then the seller of the option for the amount paid by the buyer must fulfill his obligations at the request of the buyer.

Rice. 7. Making a profit on a sold Put option on a futures on Gazprom shares

Options buyer risk total loss the value of the option if it is not expedient to exercise (if the price has not gone beyond the strike for the value of the option).

The option seller's risk is the need to fulfill the buyer's demand at an unfavorable price (if the option price has gone beyond the strike by the value of the option itself).

Thus, the buyer has unlimited profit potential when the value of the underlying asset moves in excess of the specified strike in the direction of the option, but 100% risk if this movement is not realized before the expiration date. (But if you see that the movement is unlikely to go, then you can sell the existing option, reducing your risk).

The seller of an option has a limited return on the value of the option itself (the amount paid by the buyer), but unlimited risk if the price of the underlying asset goes beyond the strike price by an amount greater than the value of the option. But the seller is more likely to make a profit, since it is enough for the seller to either move the asset in the direction opposite to the strike price, or the asset does not move at all. The buyer, on the other hand, makes a profit if the asset moves towards the strike price.

An example of earning on an increase in volatility. Options can be bought not only individually, but also in a complex, forming a portfolio of options that will generate income in a more non-linear way. So, for example, if you buy both a call and a put at the same strike at the same time, then a profit can be formed with any movement of the underlying asset, even if the price rises, even if the price falls by an amount exceeding the cost of acquiring both options. This is because in the case of an increase, the put option depreciates, and the call option rises in price. And as soon as the call rises in price above the value of the put and the call, profit is made. Similarly, if the value of the underlying goes down, then the value of the call depreciates and the value of the put goes up. And as soon as the put rises in price above the cost of both options, a profit is formed. This kind of option construction is called volatility buying.

Rice. 8. Making a profit on simultaneously purchased call and put options on a futures on Gazprom shares

Conclusion

To conduct successful exchange trading, learning to trade options is highly desirable, since options help control risks. But in addition to risks, you can earn on absolutely non-linear variations in price movements, building various option structures, but this will require more experience.

Topic 7. Options

Options are concluded both on the exchange and on the over-the-counter market. Until 1973, trading was conducted on the over-the-counter market.

In April 1973, options trading was first opened on the Chicago Board Options Exchange. In recent years, options have been traded on the American, Pacific, Philadelphia, and New York Stock Exchanges. Exchange option contracts are standards, i.e. are concluded for a standard period, include one full lot of an asset (stocks, bonds, currencies).

There are two options trading systems on the stock exchange. The main difference between them is whether trading is organized with the participation of "specialists" or market makers.

In particular, on the American Stock Exchange, trading is organized with the help of specialists who perform two functions: they act simultaneously as dealers and brokers. The "specialists" are assigned to deal in certain option contracts and act as dealers and brokers for them. Stock exchanges can be operated by stock traders who trade only at their own expense, buying at low prices and selling by high prices, and stockbrokers who execute clients' orders.

On the Chicago Board Options Exchange, the market is organized by market makers who act only as dealers. Holders of limit books, who have a book of limit orders, also participate in the trades.

Market makers must trade with brokers who are members of the exchange and execute clients' orders. Market makers have a stock of options contracts and quote them with the announcement of the ask price and the ask price. As a rule, several market makers deal with options on a particular asset. A market maker is prohibited from executing clients' orders for options assigned to it, but it can execute such orders for other options.

The holder of the limit order book is not allowed to participate in the trade. Unlike "specialists", he can show the book of limit orders to other members of the exchange. The holder of the book of orders is located at the trading post (place in trading floor exchanges where securities with similar characteristics are traded) where the options assigned to it are traded. All orders must be executed at the trading post by "shouting", which means that the auction is conducted verbally.

All options exchanges are continuous markets - orders can be executed at any time during the operation of the exchange

Investors who trade options with the help of brokers pay a commission, which consists of two parts:

Fixed commission when buying or selling an option;

Percentage of the transaction amount.

If the contract is executed, the investor again pays a commission.

The buyer of the option is obliged to fully pay the option the next day after the purchase of the option. The investor transfers the premium amount to the broker, the broker credits the premium amount to an account with the clearing house, and the clearing house transfers the premium to the option writer's broker.

Since only the seller of the option (an investor holding a short position) is liable under an option contract, he is obliged to transfer a guarantee (collateral) fee or margin to the clearing house.

In case it is issued covered call option (covered call writing), i.e. when the seller of the option owns the underlying shares, he does not have to post a cash deposit. On the contrary, the premium paid by the buyer is transferred to him. The seller's shares are held by the broker until the expiration of the contract. If the buyer decides to exercise the option, then the required shares will be ready for delivery.

If issued uncovered call option (naked call writing) , those. the seller of the option does not hold the underlying shares, then margin conditions are more complex. One of the digits is determined, which will be greater:

The first is equal to the option premium plus 20% of the market value of the underlying stock, minus the difference between the strike price of the option and the market price of the stock (assuming the strike price is greater than the market price of the stock);

The second is equal to the sum of the option premium and 10% of the market value of the underlying shares.

Example. The investor writes a call option and receives a $3 premium per share. The strike price of the option is $60. If the underlying stock sells for $58, then the margin will be the higher of the two numbers calculated below.

Method 1.

The option premium is $300 ($3×100);

20% of the market value of the shares $1160 (0.20 × $58 × 100);

The excess of the strike price of the option over the market value of the share $200 [($60 - $58) × 100];

Difference ($1160 - $200) = $960;

Total $960 + $300 = $1260.

Method 2.

The option premium is $300 ($3 × 100);

10% share market value $580 (0.10 × $58 × 100)$

Only $880.

Since the first method gives a larger number, the first result is used. The seller must transfer $1260 to the broker. Since a premium can be used for this purpose, the seller is only really required to deposit $960.

Margin requirements for put options are similar. If the seller of the put option has cash (or other securities) equal to the strike price of the put option in the brokerage firm's account, no margin is required. In addition, the seller can withdraw from the account an amount of money equal to the premium received from the buyer, because. the account continues to have collateral equal in value to the strike price of the option. If there is no money on the seller's account, such an option is called uncovered put option (naked put writing). The amount of margin required from such a seller is calculated in the same way as in the case of an uncovered call option.

is a financial instrument that stands out among other popular assets, primarily due to its versatility. However, in the course of option trading, it is important not to forget about the main rule of trading - consistency. This means that for stable profit generation, the investor will need to choose an effective strategy.

Today, on the Internet you can find a huge number of various trading systems, including those based on optional Greeks. However, if you are new to this market, it is best to start by learning the basic tactics. Believe guided by the most simple diagrams, you can achieve quite high results.

Trading Strategies of Simple Buying and Selling Call Options?

First, you need to start with the fact that the option has two prices - at the time of purchase and at the time of expiration. Therefore, if at the time of purchasing a contract, for example, it is in a profitable zone, this does not mean that it must be held until destruction. After all, expiration is often accompanied by a huge loss.

This strategy is very simple because it works on the same principles as on the others. trading floors. The Call option should be bought at the moment when the value is expected to rise. It is important that after the purchase, the price continues to move. Therefore, if the price has increased slightly after purchasing the contract, do not wait for expiration, try to sell the option and earn on the difference in purchase and sale.

We figured out the purchase, now let's talk about the features of selling a Call option.

Selling an option naked is a very risky trade, especially for a beginner who doesn't understand exactly what to do. Basically, pseudo experts scare novice option traders with unlimited losses, but the same can be said about other stock exchanges. For example, futures trading is no less risky than options trading.

If an investor understands the system for selling option contracts, then he will be able to save his deposit from unnecessary risk. When an option is sold, the trader is acting as an insurance company, hence the well-known term "write an option". The investor receives a premium for selling the option.

Until 2012, after the sale of an option, a premium was immediately credited to the trader's account. However, it could easily melt away if the value went against the investor. However, since 2012, margined option contracts have appeared on Russian trading floors. This means that immediately after the sale, the money is not credited to the account, on the contrary, a calculation is carried out, according to which the trader receives a variation profit depending on the value movement vector.

It is necessary to sell Call options at the moment when you think that the price will not rise, in other words, the quotes will go down or not budge at all. The trader's key motive in this situation is to earn a premium.

It is not always possible for traders to predict the direction of the market movement with maximum accuracy. In such situations, it is important to fix losses in a timely manner in order to exit a losing trade with a minimum drawdown.

The formation of a global trend can significantly hit the investor's trading account, in this regard, it is more expedient to close a deal in the glass and lose 2,000 rubles than to wait for some time and eventually lose 15,000 rubles.

Simple purchase and sale of an exchange put option

Working with Put options is based on the fact that the investor predicts a collapse in value financial asset. At first, it may seem that it is more efficient to simply sell the Call contract. However, this is not the case, because this kind of decision limits the profitability of the transaction only to the premium.

Thus, from the above, we can conclude. If you think the value of the traded asset will remain the same or fall by 2-3%, sell the Call option. However, if you expect a protracted crisis that will become the foundation for a downtrend, be sure to buy a Put contract. In this case, the loss is limited to cash, which is paid out as a premium.

The fall in the value of a financial asset is accompanied by a significant increase in volatility, of course, this is another argument in favor of trading Put options. As a rule, an increase in volatility also leads to an increase in the price of contracts of this type.

You can also earn money by selling Put contracts. However, the conditions for such activity are radically opposite, in other words, the investor should sell the Put option in cases where he is sure that the value of the traded financial asset will no longer decrease.

Call-Spread Options Trading Strategy

The essence of this trading model is to simultaneously buy and sell a Call option. For example, an investor buys a Call contract at a strike price of 59 pips and spends 10,000 pips. When the quotes reach, for example, 67 strike prices, this contract is sold.

As a result, the investor will cover the funds spent on the purchase with the funds received from the sale of the option and the premium, if the contract closes in the range from 59 to 67 strike prices. The proposed figures are characterized by a profit in the amount of 2000 points, of course, this is far from the highest profitability. Therefore, before using the Call-Spread strategy, it is necessary to carefully consider the feasibility of using this trading system.

Conclusion

Basic stock options trading strategies significantly different from trading systems on the currency, stock or commodity market. First of all, this is due to the fact that option contracts are not linear instruments, which means that you can use strengths option.

The commission must be paid to the broker when the option is sold, bought or resold. Commission fees have declined significantly since options trading began in 1973. Typically, options commissions are less than commissions for the purchase of the underlying stock. This is most likely due to the fact that options are cleared and settled in a simpler form than for shares (there are no certificates for options that must change hands during transactions), and are characterized by a smaller order size (total amount of money , paid when buying an option, is much less total amount paid for the underlying shares)5.

Exchange trading in options is organized by the type of futures. Her distinguishing feature- the parties are not in the same position in terms of contractual obligations. Therefore, the buyer of an option pays only the premium when opening a position. The seller of the option is required to post initial margin. When the current rate of the underlying asset changes, the margin may change to ensure that the option is exercised by the seller. When the option is exercised, the clearing house selects the person with the opposite position and instructs him to act in accordance with the contract.

The most attractive for investors is exchange trading in options. In its technique, it is in many ways similar to futures trading. Most exchanges use the institution of dealers who make the market, that is, they act as a buyer and seller, naming their quotes. The spread limits are set by the exchange itself, depending on the price of the options. Such a trading system ensures high liquidity of contracts, since at any time they can be bought or sold at a certain price. A large role in the issue of liquidity is played by the standard nature of option exchange contracts. In the US, one option contract includes 100 shares and is concluded for a standard period of time. Stock options are predominantly American.

In the United States, exchange trading in options for securities and indices is carried out both on specialized exchanges, for example, on the Chicago Options Exchange (CBOE), and on the American, Pacific, Philadelphia and New York Stock Exchanges.

Currently, exchange options trading proceeds according to two main schemes.

Ultimately you will get a feel for when the patterns are complete (eg when - and why - the movement will stop or stop and reverse). This method is applicable to any chart showing anything that is being traded - an individual stock, a futures contract, a commodity, an option, etc. and any period. As long as something is traded and the process can be charted, the same basic methods of technical analysis apply. The purpose of this chapter is to provide a brief overview of technical analysis and the initial steps in developing and implementing your own trading system. Entire books have been written on some of the topics covered here briefly (See the Sources section.)

Despite the fact that this book is intended primarily for those who are engaged or plan to trade directly in futures contracts, the principles of technical analysis outlined in it can be applied with the same success in trading spreads and options. Some of the features of using the technical approach in these two most important areas of exchange trading are briefly discussed in appendices 1 and 2. Finally, no book on technical analysis can be considered complete without mentioning the legendary W. D. Gann. Without being able to dwell on the provisions of his teachings within the framework of this book, we will talk about several of his most simple and, according to some experts, effective tools in appendix 3.

These requirements are defined by Decree of the Government of the Russian Federation No. 981 dated October 9, 1995. Regulations on licensing the activities of exchange intermediaries and stock brokers

Then, in the law On Commodity Exchanges and Exchange Trade, adopted by the Supreme Council of the RSFSR on February 20, 1992, fixed-term contracts and transactions with them were mentioned. With the development of the Russian stock market, the complication of transactions with securities and the increase in their volume, it was necessary to standardize transactions, and derivative securities began to be used in stock trading. Finally, as mentioned earlier, Decree of the President of the Russian Federation of November 4, 1994 No. 2063 on the securities market in Russia provided for admission to the public placement of options and warrants on securities.

On November 9, 1995, the Government of the Russian Federation approved the Regulation on Licensing the Activities of Exchange Intermediaries and Exchange Brokers Making Commodity Futures and Options Transactions in Exchange Trade. By this time, the turnover of the Russian futures market amounted to about 100 million US dollars, and on the St. Petersburg Futures Exchange, the terms of contracts circulation ranged from one day to 9 months with a turnover of up to 10 million US dollars.

Unlike futures trades, options trading does not require an exercise price. This is done only when the exercise of the use option increases the profit. The buyer of an exchange option may refuse to exercise the option altogether - in this case, he suffers a loss in an amount equal to the original purchase price, or the option premium.

In Russia, the derivatives market began to develop in November 1992. However, until October 1995, this sector of the financial market did not have a sufficient legal and regulatory framework. The only law that mentioned futures contracts was the Law On Commodity Exchanges and Exchange Trade, adopted by the Supreme Court of the RSFSR on February 20, 1992. On November 9, 1995, the Government of the Russian Federation approved the Regulations on licensing the activities of exchange intermediaries and stock brokers making commodity futures and option transactions in stock trading.

At the heart of the options admitted to exchange trading are those securities specially selected by the management of the exchange, the sale of which has become the object of the option right. The fulfillment by the joint-stock company of financial obligations, including the regularity of payment of dividends on shares, the number of shareholders of the company, the time of circulation of the shares of this company on the stock exchange, are taken into account. Options traded on an exchange are called quoted options.

The concept of listed stock options not only provided a convenient market for trading puts and calls, but also standardized the expiration dates and prices set for these options. Options exchanges have created special clearinghouses that have eliminated direct links between buyers and option underwriters and reduced the cost of exercising puts and calls. By widely disseminating price information, they also contributed to the development of an active secondary market. As a result, it is now just as easy to trade stock options as it is to trade stocks.

The emergence of the Chicago and other options exchanges had a quick and effective impact on put and call trading volumes. As can be seen from fig. 11.4, the level of activity in operations with exchange-traded stock options grew so rapidly that within 8 years the annual volume of contracts traded on the exchange exceeded the 100 millionth mark. And although contract volume declined in 1988, it still remains close to $115 million. If this figure is expressed in terms of shares, then we are talking about 11.5 billion shares (since each option (contract) covers 100 common stock), which is almost equivalent to 30% of all shares traded on the New York Stock Exchange in 1988.

Exchange options trading, in addition to increasing investor confidence, has added an important third possible course of action for buyers and sellers of options. Their choice was no longer limited to exercising the option or waiting for it to expire. Like futures contracts, exchange-traded option positions can be closed by an opposing market transaction, thus removing the buyer or seller of the option from the market. This innovation opened the door to a significant increase in futures options trading.

The derivatives market is closely related to the foreign exchange market, and primarily based on the exchange of one currency for another or securities in one currency for another. The volume of the derivatives market in recent years (1986-1997) has grown significantly according to the statistics of exchange trading by 19 times (from 618.8 billion dollars to 12.2 trillion dollars a year), the number of options traded on exchanges has reached 1 .2 billion contracts [Mikhailov, p. 88], and taking into account non-exchange trading systems -50 trillion dollars [Bulatov, p. 197]. The bulk of this market falls on currency futures and swaps, mostly short-term.

The essence of the option is to draw up a contract for the right to buy (all) or sell (put) a certain number of securities. The buyer of the option pays the seller a fee (premium). The buyer of the option may or may not exercise the purchased right. Unlike futures, an option allows investors and exchange intermediaries to determine and limit risk in the form of a premium - a premium paid for the right to buy or sell securities under futures contracts. Option holders are not limited by maximum possible prices and expiration dates, and can take advantage of market trends. A variety of market situations and tactics in options trading, their various combinations with futures make these financial instruments quite attractive to investors.

Since 1982, futures and options have appeared, which are based on stock indexes (sto k index). The attractiveness of stock indices for investors lies in the fact that, as an object of exchange trading, they allow you to avoid the risk associated with the deterioration of the financial position of individual companies whose shares are traded. In fact, trading with indices gives investors the opportunity to play on the industry or the stock market as a whole. And fa is based on the fact that the values ​​of stock indices change over time on a certain date, the value of the stock index is taken as the base one, however, over time, this value may change due to the fact that both the composition of the index and the index itself may change. tracking the daily movement of stock prices (Fig. 2.1).

However, there is a case where options could be aggressively bought by insiders and still not be accompanied by a large amount of trading. This situation could happen with illiquid options. In this case, a stockbroker filling insiders' orders could go to the pit to buy options. However, market makers are unlikely to sell him much, preferring to raise the ask price (ask) on them. If this happens several times in a row, the options will become very expensive as the broker raises the ask price repeatedly but only buys a few contracts each time. Meanwhile, the market maker continues to raise the offer price. Ultimately, the stock broker concludes that the options are too expensive and leaves. Perhaps the client then buys the shares themselves. In any case, options became very expensive as supply and demand rose repeatedly, but there was actually not much volume due to the illiquidity of the contracts. Therefore, the usual warning associated with a sudden increase in option trading volume would be absent. However, even in this case, the seller of volatility should be careful. You don't want to sell all options right before big corporate news is announced. The key here is the implied volatility can explode in a short period of time (within one day), which in itself is sufficient warning.

The Compliance Department investigates and detects violations of the Exchange Trading Rules and FT regulations. Violations may relate to both the process of concluding futures and option transactions, and violations in the internal activities of a market entity. The branch has the right, while representing the Commission, to file claims in courts. Alleged violations of the Stock Trading Rules or violations of other Federal laws that relate to stock trading in standard contracts may also be appealed to the Department of Justice for further prosecution. In addition, the Division also seeks background information and technical assistance in investigating specific situations from US law firms, other federal and state agencies, and international authorities.

Fortunately, this situation is not typical for the United States, since there are standard contracts and a fairly liquid market for stock options1. Options trading is greatly simplified with the help of the Options Clearing Corporation (OCC). It is a company jointly owned by several exchanges. This company has

Options are concluded both on the exchange and on the over-the-counter market. Until 1973, trading was conducted on the over-the-counter market.

In April 1973, options trading was first opened on the Chicago Board Options Exchange. In recent years, options have been traded on the American, Pacific, Philadelphia, and New York Stock Exchanges. Exchange option contracts are standards, i.e. are concluded for a standard period, include one full lot of an asset (stocks, bonds, currencies).

There are two options trading systems on the stock exchange. The main difference between them is whether trading is organized with the participation of "specialists" or market makers.

In particular, on the American Stock Exchange, trading is organized with the help of specialists who perform two functions: they act simultaneously as dealers and brokers. The "specialists" are assigned to deal in certain option contracts and act as dealers and brokers for them. Stock exchanges can be operated by stock traders who trade only at their own expense, buying at low prices and selling at high prices, and stock brokers who follow the orders of clients.

On the Chicago Board Options Exchange, the market is organized by market makers who act only as dealers. Holders of limit books, who have a book of limit orders, also participate in the trades.

Market makers must trade with brokers who are members of the exchange and execute clients' orders. Market makers have a stock of options contracts and quote them with the announcement of the ask price and the ask price. As a rule, several market makers deal with options on a particular asset. A market maker is prohibited from executing clients' orders for options assigned to it, but it can execute such orders for other options.

The holder of the limit order book is not allowed to participate in the trade. Unlike "specialists", he can show the book of limit orders to other members of the exchange. The holder of the order book is located at the trading post (a place on the trading floor of the exchange where securities with similar characteristics are traded), where the options assigned to him are traded. All orders must be executed at the trading post by "shouting", which means that the auction is conducted verbally.

All options exchanges are continuous markets - orders can be executed at any time during the operation of the exchange

Investors who trade options with the help of brokers pay a commission, which consists of two parts:

Fixed commission when buying or selling an option;

Percentage of the transaction amount.

If the contract is executed, the investor again pays a commission.

The buyer of the option is obliged to fully pay the option the next day after the purchase of the option. The investor transfers the premium amount to the broker, the broker credits the premium amount to an account with the clearing house, and the clearing house transfers the premium to the option writer's broker.

Since only the seller of the option (an investor holding a short position) is liable under an option contract, he is obliged to transfer a guarantee (collateral) fee or margin to the clearing house.

In case it is issued covered call option (covered call writing), i.e. when the seller of the option owns the underlying shares, he does not have to post a cash deposit. On the contrary, the premium paid by the buyer is transferred to him. The seller's shares are held by the broker until the expiration of the contract. If the buyer decides to exercise the option, then the required shares will be ready for delivery.

If issued uncovered call option (naked call writing) , those. the seller of the option does not hold the underlying shares, then margin conditions are more complex. One of the digits is determined, which will be greater:

The first is equal to the option premium plus 20% of the market value of the underlying stock, minus the difference between the strike price of the option and the market price of the stock (assuming the strike price is greater than the market price of the stock);

The second is equal to the sum of the option premium and 10% of the market value of the underlying shares.

Example. The investor writes a call option and receives a $3 premium per share. The strike price of the option is $60. If the underlying stock sells for $58, then the margin will be the higher of the two numbers calculated below.

Method 1.

The option premium is $300 ($3×100);

20% of the market value of the shares $1160 (0.20 × $58 × 100);

The excess of the strike price of the option over the market value of the share $200 [($60 - $58) × 100];

Difference ($1160 - $200) = $960;

Total $960 + $300 = $1260.

Method 2.

The option premium is $300 ($3 × 100);

10% share market value $580 (0.10 × $58 × 100)$

Only $880.

Since the first method gives a larger number, the first result is used. The seller must transfer $1260 to the broker. Since a premium can be used for this purpose, the seller is only really required to deposit $960.

Margin requirements for put options are similar. If the seller of the put option has cash (or other securities) equal to the strike price of the put option in the brokerage firm's account, no margin is required. In addition, the seller can withdraw from the account an amount of money equal to the premium received from the buyer, because. the account continues to have collateral equal in value to the strike price of the option. If there is no money on the seller's account, such an option is called uncovered put option (naked put writing). The amount of margin required from such a seller is calculated in the same way as in the case of an uncovered call option.

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