- FLEX® Options
- Introduction to Cboe Equity FLEX Options
- Index FLEX® Options
- Equity FLEX® Options
- You May Also Like
- Continue Reading...
- Buying Straddles into Earnings
- Writing Puts to Purchase Stocks
- What are Binary Options and How to Trade Them?
- Investing in Growth Stocks using LEAPSÂ® options
- Effect of Dividends on Option Pricing
- Bull Call Spread: An Alternative to the Covered Call
- Dividend Capture using Covered Calls
- Leverage using Calls, Not Margin Calls
- Day Trading using Options
- Place an options trade in CMC Markets Pro platform
- What is the Put Call Ratio and How to Use It
- Understanding Put-Call Parity
- Understanding the Greeks
- Valuing Common Stock using Discounted Cash Flow Analysis
FLexible EXchange® Options, or FLEX® Options, were introduced by CBOE in 1993.
They were designed to give institutional investors greater access to customized derivatives. FLEX® options provide customization features similar to over-the-counter (OTC) options but with the convenience and guarantee of exchange-traded options.
Similar to OTC options, FLEX® options allow contractual terms such as expiration date, exercise price, style and contract size to be individually specified.
Unlike OTC options, FLEX® options are traded through the exchange, with the Options Clearing Corporation (OCC) being the issuer and guarantor of all FLEX® option contracts.
Introduction to Cboe Equity FLEX Options
As the OCC is the largest derivatives clearing organization in the world as well as the first to be awarded a "AAA" credit rating from Standard & Poor, the trading of FLEX® options is considered to be virtually free of counterparty risk.
Index FLEX® Options
The first types of FLEX® options to be introduced were FLEX® option contracts on stock market indices and hence they are often simply referred to as FLEX® options.
Index FLEX® options are available on all CBOE listed indices, including the following major indices:
Equity FLEX® Options
Following the success of Index FLEX options, CBOE launched FLEX® options on individual equities in 1995 and they were known as E-FLEX® options.
E-FLEX® options are available on a wide range of actively traded underlying stocks and they include most option classes that are listed at CBOE.
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Buying Straddles into Earnings
Buying straddles is a great way to play earnings. Many a times, stock price gap up or down following the quarterly earnings report but often, the direction of the movement can be unpredictable.
For instance, a sell off can occur even though the earnings report is good if investors had expected great results....[Read on...]
Writing Puts to Purchase Stocks
If you are very bullish on a particular stock for the long term and is looking to purchase the stock but feels that it is slightly overvalued at the moment, then you may want to consider writing put options on the stock as a means to acquire it at a discount....[Read on...]
What are Binary Options and How to Trade Them?
Also known as digital options, binary options belong to a special class of exotic options in which the option trader speculate purely on the direction of the underlying within a relatively short period of time.....[Read on...]
Investing in Growth Stocks using LEAPSÂ® options
If you are investing the Peter Lynch style, trying to predict the next multi-bagger, then you would want to find out more about LEAPSÂ® and why I consider them to be a great option for investing in the next MicrosoftÂ®....
Effect of Dividends on Option Pricing
Cash dividends issued by stocks have big impact on their option prices.
This is because the underlying stock price is expected to drop by the dividend amount on the ex-dividend date....[Read on...]
Bull Call Spread: An Alternative to the Covered Call
As an alternative to writing covered calls, one can enter a bull call spread for a similar profit potential but with significantly less capital requirement.
In place of holding the underlying stock in the covered call strategy, the alternative....[Read on...]
Dividend Capture using Covered Calls
Some stocks pay generous dividends every quarter. You qualify for the dividend if you are holding on the shares before the ex-dividend date....[Read on...]
Leverage using Calls, Not Margin Calls
To achieve higher returns in the stock market, besides doing more homework on the companies you wish to buy, it is often necessary to take on higher risk.
A most common way to do that is to buy stocks on margin....[Read on...]
Day Trading using Options
Day trading options can be a successful, profitable strategy but there are a couple of things you need to know before you use start using options for day trading....
Place an options trade in CMC Markets Pro platform
What is the Put Call Ratio and How to Use It
Learn about the put call ratio, the way it is derived and how it can be used as a contrarian indicator.... [Read on...]
Understanding Put-Call Parity
Put-call parity is an important principle in options pricing first identified by Hans Stoll in his paper, The Relation Between Put and Call Prices, in 1969.
It states that the premium of a call option implies a certain fair price for the corresponding put option having the same strike price and expiration date, and vice versa....
Understanding the Greeks
In options trading, you may notice the use of certain greek alphabets like delta or gamma when describing risks associated with various positions.
They are known as "the greeks".... [Read on...]
Valuing Common Stock using Discounted Cash Flow Analysis
Since the value of stock options depends on the price of the underlying stock, it is useful to calculate the fair value of the stock by using a technique known as discounted cash flow....