P235 CEEFAX 235 Thu 28 Oct 21:05/12 1/6 ALL ABOUT OPTIONS Traded options confer on holders a right to buy or sell a security - shares, etc - at a fixed price and within a fixed period. At LIFFE (page 299) traded options are available on more than 70 FT-SE equities and on the FT-SE inde|. Enjoying a negotiable status, they can (like shares) bj bought or sold at any time. This flexibility offers individuals the chance to profit from rising or falling markets. Options index 230 Headlines 201 Index options 234 SHARECHECK 220 Next Page Options FUSE/FT30 CityHeadsP235 CEEFAX 235 Thu 28 Oct 21:01/10 2/6 ALL ABOUT OPTIONS $radjd options conj in two shapes - "calls" and "puts". The buyer of a call option has thu right but not the obligation to buy a fixed number of shares at a fixed price before a set date. The buyer of a put option has the right (but not the obligation) to sell under the same limitations. Individual equity options may only bj dealt in whole contracts, each of which normally represents an option on 1,800 of the underlying shares, j.g.Q1,000 \ZZ shares. Options index 230 Headlines 201P235 CEEFAX 235 Thu 28 Oct 21:12/06 3/6 ALL ABOUT OPTIONS The fixed price at which a holder 5 can bu (call) or sell (put) th underlying shares is known as thu "exercise price". $hjsj are set at levels below, 1t, and above the current share price. Equity options have a limited lift, conforming to one of three annual cycles Xpbgj 230). Three expiry options are quoted at any one time. XZZ, for example, may bj on a Jan/Apr/Jul/Oct cycle, with at any one time only the nearest three months quoted for trading. Options index 230 Headlines 201 Next Page Options FUSE/FT30 Cit=Hj1dsP235 CEEFAX 235 Thu 28 Oct 21:17/54 4/6 ALL ABOUT OPTIONS $hj buyer of a traded option pays a bpremium" Xprice) in pence a share. Premiums in XZZ may bj quoted thus, when the shares stand at 254p. CALLS PUTS Jan Apr Jzl Jan Apr Jul XZZ 24p 25 3u 42 6 10 12 *254 2v0 14 24 31 14 18 20 28p 7 15 23 27 29 30 Here, the premium for the January 240 call is 25p. This confers the right to buy 1,00p XZZ sharer at 240p up to the January expiry date. So a contract is £250 X25p | 1890). Options index 230 Headlines 201 Next Page Options FUSE/FT30 CityHjadsP235 CEEFAX 235 Thu 28 Oct 21:03/38 G ALL ABOUT OPTIONS Buying traded options involves a strictly limited risk: the m1xhm9* loss is limited to the premium of the option, which iu a fraction of the share price. Ceefax displays prices of options on both individual equities and the FT-SE 100 index. Traded options on the index operate on similar lines to equity options. They are cash-settled on the basis of £10 per index point. So the cost of one index option contract is £10 x the premium. Options index 230 Headlines 201 Next Page Options FUSE/FT30 CityHjadsP235 CJEFAX 235 Thy 28 Oct 21:24/16 6/6 ALL =O=w =PT=ON5 FuDtCJr d ta ls ar avb labl in a L FFE bookl , An Int oduction to EquSty and Index Options, av ilable free of charge from: Kirsty Grant quity P oducts Departm nt LIFFE Cannon ridg London aC 2 j T l. 071-37n 2486 General e sir ma b addre 3 d to Julian P ins or Ton Hawe in sine s D e o m nt D pa tm nt j at LuFFF on tel. 071-379 2486. Options index 23 SHARECHECK 220 Next Page Options FUSE/FT30 ityHjxds