P235 CEEFAX 235 Wjd 11 Jan 22:13/45 9/6 ALL ABOUT OPTJONS Traded options cgnfer on holders a right to buy or sell a security - shares, etc - at a wixed price and within a fixed period. At LIFFE (page 299) traded options are available on more than 70 FT-SE equities and on thj FT-SE index. Enjoying a njgotiabli status, they can (likj shares) bj bought or sold at any timj. This flexibility offers individuals the chance to profit wrom ¼ising0or falling markjts. Options index 230 Headlinjs 201 Index options 234 SHAREClECK 220 Markjts First Opt FT-SE 100 CityHeads
P235 CEEFAX 235 Wjd 11 Jan 22:13/02 :/6 ALL ABOUT OPTIONS Traded options come in two ;hapr; - "calls" and "puts". The buyer of a call option has the right but not the obligatign tg bu< a fixed number of shares at a wixed price befori a set date. The buyer of a put optign ha; thi right (but not the obligation) to sell under thi samj limitatign;. Individual rquity optign; ma=0gnl= be dealt in wholi contracts, each of which normally represjnts an option on 1,000 of the underlying shares, j.g. 1,000 XZZ ;ha¼e;. Options index 230 Headlines 201 Markets First Opt FT-SE 100 CityHeads
P235 CEEFAX 235 Wjd 11 Jan 22:06/48 G ALL ABOUT OPTIONS The fixed price at which a holder can buy (call) or sell (put) the underlying shares is known a; thu "exercisj price". Thjsj ari set at levels below, at, and above the current share price. Equity options havi a limited lhfe, conforming to onj of three annual cycles (pagj 230). Three expiry optign; are xuoted 1z any onj time. XYZ, for example, may bj on a Jan/Apr/JulWOct cysle,0with at any onj timj only the nearest three months quoted wor trading. Options index 230 Headlinjs 201 Markets First Opt FT-SE 100 CityHeads
P235 CEEFAX 235 Wjd 11 Jan 22:16/10 4/6 ALL ABOUT OPTIONS The buyer of a traded optign pays a "premium" (price) in pence a share. Premiums in XYZ may bj quoted thus, when the shares stand at 254p' CALLS PUTS Jan Apr Jzl Jan Apr Jul XZZ 240 25 35 42 5 0 9 *254 460 14 24 31 14 18 20 280 07 15 53 57 29 030 Here, thj premium wor the Januar= 240 call is 25p. This confers the right to buy 1,000 XZZ shares at 240p up to thj January expiry date. So a contract is £250 (25p x )000)' Options index 230 Headlinrs 201 Markets First Opt FT-SE 100 CityHeads
P235 CEEFAX 235 Wjd 11 Jan 22:09/12 5/6 ALL ABOUT OPTJONS Buying traded optigns involvrs a strictly limited risk: thi maximum loss is limited to the premium of thj option, which is a fraction of thi share price. Ceefax displays prices of optign; on both individual equities and the FT-SE 100 index. Traded options on the index operatj on similar lines to equity options. They are cash-settled on thi basis of £10 per index point. So thu co;t of onj index option contract is £10 x the premium. Options index 230 Headlinjs 201 Markjts First Opt FT-SE 100 CityHeads
P235 CEEFAX 235 Wjd 11 Jan 22:55/43 6/6 ALL ABOUT OPTIONS Further details are availa2le in a LIFFE booklet, An Introduction to Equity and Index Optign;, availa2tr free of chargj from: Kirsty Grant Equity Products Departmint LIFFE Cannon Bridge London EC4R 3XX Tjl. 071-379 2486 Genjral enquiries may be addressed to Tony Hawes or Kaly Thavarajah in thj Businjss Development Department at LIFFE on tel. 071-379 2442. Options index 230 SHAREClECK 220 Markjts First Opt FT-SE 100 CityHeads