Option definition and types

option definition and types

Gearing ratio definition Option definition Option has a particular significance in relation to IG's platform. An option is a financial instrument that offers you the right — but not the obligation — to buy or sell an asset when its price moves beyond a certain price with a set time period.

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They exist in the form of a contract, between the writer and the holder. The price at which the holder can exercise the option is referred to as the strike price. There are two types of option: Calls give the holder the option to buy an asset at or above the strike price Puts give the holder the option to sell an asset как на новый год заработать денег or below the strike price In options trading, the writer of the option makes a profit if the asset involved does not meet or move beyond option definition and types strike price, because the holder has to pay a premium in order to buy the option.

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Options tend to trade in lotswith the size of the lot varying depending on the type of option. In equity options, for instance, each contract represents shares of the stock underlying the option. Options can be used to both speculate on the movements of markets and hedge against already open positions.

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With IG Our CFD products offer the ability to trade on the price movements of a variety of options in different markets. Visit our options trading section.

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