And if pricing options is a complicated post as I understand, how do everyday people write them? Who prices it?
Answers: The formulae used to price an route is programmed into computers. The only adjustable that is not a agreed value is the "implied volatility" (IV) of the odds. When a new odds is first listed the bazaar makers will pick an IV base on other similar options outstanding next let the computer determine the price. As trading continues the open market makers will make higher the IV if they are getting a lot of information from others buying options. Similarly they will lower the IV if they are getting profusely of orders from others selling the option.
<<<how do normal culture write them?>>>
You have to grasp that "writing an option" simply means selling an preference with a "go to open" transaction, so when I write an option it simply medium I sell an odds at a price I find attractive.
The terms for planned stock options are predefined.You can read the specifications at
http://www.cboe.com/Products/EquityOptio...
<<<Who prices it?>>>
Prices are other determined by a buyer and a seller agreeing on a price. Quotes from marketplace makers aim the range of prices at which the option will trade, but a lot of trades bring place between private traders with no involvement by souk makers.
Sorry, this isn't an answer to your interview; it is a message to zman492. I have no other channel to establish contact.
You answered a question of mine, zman492.
http://answers.yahoo.com/question/index;...
I simply wanted to voice thanks for a great answer, especially the guidance about books. I'm reading one book presently and have more books on the means of access.
try these sites. Hope they help ya
http://www.coveredcalls.com/HowToSteps.h...
http://www.option-trading-guide.com/cove...
If you are looking for option related trade ideas, also check out http://www.indexoptiontrader.com
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Kathryn gratitude?
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Is a price to earn ratio the price vs. the stocks income or the companies sale yield? (P/E) ?
Answers: The formulae used to price an route is programmed into computers. The only adjustable that is not a agreed value is the "implied volatility" (IV) of the odds. When a new odds is first listed the bazaar makers will pick an IV base on other similar options outstanding next let the computer determine the price. As trading continues the open market makers will make higher the IV if they are getting a lot of information from others buying options. Similarly they will lower the IV if they are getting profusely of orders from others selling the option.
<<<how do normal culture write them?>>>
You have to grasp that "writing an option" simply means selling an preference with a "go to open" transaction, so when I write an option it simply medium I sell an odds at a price I find attractive.
The terms for planned stock options are predefined.You can read the specifications at
http://www.cboe.com/Products/EquityOptio...
<<<Who prices it?>>>
Prices are other determined by a buyer and a seller agreeing on a price. Quotes from marketplace makers aim the range of prices at which the option will trade, but a lot of trades bring place between private traders with no involvement by souk makers.
How to enter the stock market?
Sorry, this isn't an answer to your interview; it is a message to zman492. I have no other channel to establish contact.
You answered a question of mine, zman492.
http://answers.yahoo.com/question/index;...
I simply wanted to voice thanks for a great answer, especially the guidance about books. I'm reading one book presently and have more books on the means of access.
try these sites. Hope they help ya
http://www.coveredcalls.com/HowToSteps.h...
http://www.option-trading-guide.com/cove...
What you chew over in the region of this ETF Portfolio, IWM, VEU, VTI, AGG, PCL?
If you are looking for option related trade ideas, also check out http://www.indexoptiontrader.com
Resolved Questions: