Exchange Traded Options (ETO’s)
Exchange Traded Options (Options) are a derivative based asset class that offers investors another way to manage their portfolio. ETO’s offer a number of benefits including; position management flexibility, risk mitigation and leverage.
ETO’s strategies can vary from the simple to the complex. In either case, a clear understanding of the characteristics of options is needed before engaging in options trading.
What is an Option
An option is a contract to buy or sell a specific financial product known as the option’s underlying instrument. Options contracts offer very specific terms and are standardised by the particular exchange they are listed on.
Options are broken into two categories, PUTS and CALLS. Either option type can be bought or sold offering the investor a specific set of outcomes, generally based on the investor’s objectives for the investment decision.