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Discuss Options within the Financial Management ( FM ) forums, part of the Resolve Your Query - Get Help and discuss Projects category; OPTIONS An option is the right, but not the obligation, to buy or sell a specified amount (and quality) of ...

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Sunanda K. Chavan
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Options - October 8th, 2010

OPTIONS

An option is the right, but not the obligation, to buy or sell a specified amount (and quality) of a commodity, currency, index, or financial instrument, or to buy or sell a specified number of underlying futures contracts, at a specified price on or before a given date in the future. Thus, options, like futures, also provide a mechanism by which one can acquire a certain commodity or other asset, or take positions in, in order to make profit or cover risk for a price.

The concept of options is not a new one. In fact, options have been in use for centuries. The idea of an option existed in ancient Greece and Rome. The Romans wrote options on the cargoes that were transported by their ships. In the 17th century, there was an active options market in Holland.

Options were traded in UK and US during the 19th century but were mainly confined to the agricultural commodities. Earlier, they were declared illegal in the UK in 1733 and remained so until 1860. In USA, options on equity stocks of the companies were available on the Over-the-Counter (OTC) market only until April 1973.

In spite of the long time that has elapsed since the inception of options, they were, until not very long ago, looked down upon as mere speculative tools and associated with corrupt practices. Things changed dramatically in the 1970s when options were transformed from relative obscurity to a systematically traded asset, which is an integral part of financial portfolios. The year 1973 witnessed some major developments. Black and Scholes published a seminal paper explaining the basic principles of options pricing and hedging.


In the same year, the Chicago Board Options exchange (CBOE) was created. It was the first registered securities exchange dedicated to options trading. While trading in options existed for long, it experienced a gigantic growth with the creation of this exchange. The listing of options meant orderly and thicker markets for this kind of securities. Options trading are now undertaken widely in many countries besides the USA and UK. In fact, options have become an integral part of the large and developed financial markets.
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Jitendra Mazee
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Re: Options - January 18th, 2018

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Originally Posted by sunandaC View Post
OPTIONS

An option is the right, but not the obligation, to buy or sell a specified amount (and quality) of a commodity, currency, index, or financial instrument, or to buy or sell a specified number of underlying futures contracts, at a specified price on or before a given date in the future. Thus, options, like futures, also provide a mechanism by which one can acquire a certain commodity or other asset, or take positions in, in order to make profit or cover risk for a price.

The concept of options is not a new one. In fact, options have been in use for centuries. The idea of an option existed in ancient Greece and Rome. The Romans wrote options on the cargoes that were transported by their ships. In the 17th century, there was an active options market in Holland.

Options were traded in UK and US during the 19th century but were mainly confined to the agricultural commodities. Earlier, they were declared illegal in the UK in 1733 and remained so until 1860. In USA, options on equity stocks of the companies were available on the Over-the-Counter (OTC) market only until April 1973.

In spite of the long time that has elapsed since the inception of options, they were, until not very long ago, looked down upon as mere speculative tools and associated with corrupt practices. Things changed dramatically in the 1970s when options were transformed from relative obscurity to a systematically traded asset, which is an integral part of financial portfolios. The year 1973 witnessed some major developments. Black and Scholes published a seminal paper explaining the basic principles of options pricing and hedging.


In the same year, the Chicago Board Options exchange (CBOE) was created. It was the first registered securities exchange dedicated to options trading. While trading in options existed for long, it experienced a gigantic growth with the creation of this exchange. The listing of options meant orderly and thicker markets for this kind of securities. Options trading are now undertaken widely in many countries besides the USA and UK. In fact, options have become an integral part of the large and developed financial markets.
Thanks my friend for providing such a nice information on Options. I also found something important which might be of your uses so uploading here a presentation on Options. Please download and check it and let me know your feedback.
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