P235 CEEFAX 235 Fri 15 Apr 21:29/28 G ALL ABOUT OPTIONS $radjd options confer on holders a right to buy or sell 10security - 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 zhe FT-SE indeX. Enjoying a negotiable status, they can (like shares) bj bought or somd at any time. $his flexibility offers individuals the chance to profit from rising or falling markets. Options index 230 Headlines 201 Index options 234 SHARECHECK 220 Mark ts First Opt FUSE/FT30 Cit HeadsP235 CEEFAX 235 Fri 15 Apr 21:23/27 F ALL ABOUT OPTIONS Traded options come in two shapes - "callsb 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. $hj buyer of a put option has the right Xbut 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,X00 of the undjul9ink shares, e.g. 1,000 XYZ sharer. Options index 230 Headlinrs 201P235 CEEFAX 235 Fri 15 Apr 21:16/45 G ALL aBOUT OPTIONS The fixed price at which a hkldur can buy (call) or sell (put) the undjul9ing shares iu known as thB "exjrcisj pricjb. Thjuj are set at levels belou, at, and above the current share price. Equity options have a limited life, c nformin to on o hr u j cycles Tpagj 230). $hree expiry options are quoted at any one time. XZZ, for kxample, ma9 bj on a Jan/Apr/Jul/Oct cycle, with at any one time only the njareut three months quoted for trading. Options index 230 Headlines 201 Markets First Opt FUSE/FT30 CityHjadsP235 CKJFAX 235 Fri 15 Apr 21:24/23 4/6 n2n1 |. ALL AB UT OPTJO S -hj buyer of a traded option pays a "premium" Tyrice) in 8jnce a shark. Premiums in XYZ may bj quoted thus, when the shaker stand 1t 2548W CALLS PUTS Jan Apr Jul Jan Apr Jul XZZ 240 2k 35 42 6 1X 12 *254 260 14 24 31 14 18 20 280 07 15 23 27 29 30 Here, the premi5m for the Januar8 240 call is 25p. This confers the right to buy 1,000 XYZ sharer at 240p up to the January uxpiry date. So a contract is £250 X25p | 1X00). Options index 230 Headlines 201 Markjt2 First Opt FUSE/FT30 Ait8Hjad1P235 CEEFAX 235 Fri 15 Apr 21:24/41 5/6 ALL ABOUT OPTIONS I Buying traded options involves a strictly limited risk: the maximum loss is limited to the premium of the option, which is a fraction of the share price. Ceefax displays prices of options on both individual equities and the FT-SE 100 index. $radjd options on the index operate on similar lines to equity options. They are cash-settled on the basis of £10 per index point. So th cost of one index option contract iu £10 x the premium. Options index 230 Headlines 201 Markets First Opt FUSE/FT30 CityHjadsP235 CEEFAX 235 Fri 15 Apr 21:12/20 ] 6/6 ALL aBOUT OPTIONS I Further details are available in a LIFFE booklet, An Introduction to Equity and Index Options, available free of charge from: Kirsty Grant Equity Products Ddpartmjnt NIFFE Cannon Bridge London EC4R 3XX Tel. 071-379 2486 General inquiries may bj addressed to Julian Perkins or Tony Dawes in the Business Development Department at LIFFE on tel. 071-379 2487. Options index 230 SHARECHECK 220 Markets First Opt FUSE/FT30 CityHjads