Options
Options are financial instruments that give the holder the right, but not the obligation, to buy or sell an asset at a predetermined price within a specified time frame. Options are typically used by investors to hedge against risk or speculate on the future price of an asset. Options are also used by companies to raise capital or to protect against potential losses.
History of Options
Options have been around for centuries, with the earliest recorded use of options dating back to the early 1600s in the Netherlands. The first modern options were traded on the Chicago Board Options Exchange (CBOE) in 1973. Since then, options have become an important part of the financial markets, with options trading taking place on exchanges around the world.
Comparison of Options
| Type of Option | Risk | Reward |
|---|---|---|
| Call Option | Limited | Unlimited |
| Put Option | Limited | Limited |
Summary
Options are a versatile financial instrument that can be used to hedge against risk, speculate on the future price of an asset, or raise capital. Options have been around for centuries, and today they are traded on exchanges around the world. For more information on options, investors can visit the websites of the CBOE, the International Securities Exchange, or the Nasdaq.
See Also
- Call Option
- Put Option
- Option Premium
- Option Strike Price
- Option Expiration Date
- Option Moneyness
- Option Greeks
- Option Spread
- Option Straddle
- Option Collar
