The higher the volume, the greater the number of options traded. In general, a higher volume means a lower spread between the "bid" and "ask" prices, the prices at which you can sell or buy the option. Lower spreads mean a better chance of profiting from the trade. Holding a bachelor's degree from Yale, Streissguth has published more than works of history, biography, current affairs and geography for young readers. At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors.
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These returns cover a period from and were examined and attested by Baker Tilly, an independent accounting firm. Visit performance for information about the performance numbers displayed above. More Articles 1. How to Read Stock Option Tables 2.
Derivative
Step 1 Access an options quotation platform online. Step 2 Enter the ticker symbol for the option you're interested in. Step 3 Access the quote board and find the volume column often abbreviated "vol". Finance: options Center. Don't confuse volume with "open interest. When an option position of contracts is closed out, open interest declines by , but volume for the day of the trade increases by Option volume is highest in the weeks and days before expiration, and at strike prices closest to the current price.
However, buying or selling an option soon to expire represents a riskier trade, as the "time value" of the option is rapidly deteriorating. Options with months to go before expiration offer less risk and more stable prices. This excludes investment income and is before adjusting for transaction-based expenses such as rebates to brokers. Of course, these include revenues from cash equities trading, listing and data services of exchanges, and hence may not be a perfect proxy for the level of derivatives activity. For perspective on the large difference between contract sizes, data collated by the WFE is helpful.
Another measure some experts prefer to look at is the level of open interest, or outstanding positions on an exchange. As pointed out by Varma earlier, the key is to measure the amount of risk being transferred, and open interest on an exchange provides some clues on this count.
Why Trading Index Options Continues to Grow in Popularity - Exegy
At CME, open interest in equity index options stood at 3. There has been steady growth; of course, as was the case 10 years ago, the gap between large global exchanges and NSE remains high in terms of revenues, open interest and notional turnover. Click here to read the Mint ePaper Mint is now on Telegram. Join Mint channel in your Telegram and stay updated with the latest business news.
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