P235 CEEFAX 235 Fri 13 May 21:24/07 1/6 AL ABO OPTIONS Traded options confer on holders a right to buy or sell a sjcurhtX - shares, etc - at a fixed price and within a fixed period. At LIFFE (page 299) traded options are available on more than 78 FT-SJ equities and on the FT-SE index. Enjoying a negotiable status, they can (like shakes) bj bought or sold at any time. This flexibility offers individual3 the chance to profit from rising or falling markets. Options index 230 Headlines 201 Index options 234 SHA ECHECK Markets First Opt FUSE/FT30 CityHjadsP235 CEEFAX 235 Fri 13 May 21:04/25 2/6 ALL ABOUT OPTIONS Traded options conj in two sha8js - "calls" and "puts". The buyer of a call option has the right but not the obligation to buy a fixed number of sharer 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 1n option on 1,000 of the undeul9ing sharer, k.g. 1,000 XYZ sharer. Options index 230 Headliner 201 Markets First Opt FUSE/FT30 CityHeadsP235 CJEFAX 235 Fri 13 May 21:12/24 G ALL ABOUT OPTIONS I 7£££££££££££££££££££££££££££££££££££££k can buy (call) ou 3ell (put) the underlying shares is known as the These are set at le6el1 below, at, and above the current share 8rice. Equity options have a limited life, conforming to one of three annual cycles Xyagj 230). -hrei expiry options are quoted at any one time. XYZ, for exampld, ma9 bj on a Jan/Bps/Jul/Oct cycle, with at an one time only the njareut three months quoted for trading. Options index 230 Headlines 201 Markets First Opt FUSE/FT30 CitXHjadsP235 CEEFAX 235 Fri 13 May 21:12/45 4/6 n1n1 |.% ALL BOUT OPTION £ £ k "premium" (price) in pence a shard. Premiums in XYZ may be quoted thus, when the shares stand at 254p. CALLS PUTS Jan Apr Jul Jan Apr Jul XZZ 240 25 35 42 6 18 12 *254 260 14 24 31 14 18 20 28p 7 1u 23 27 29 030 Here, the prjmi5m for the Jan5ar8 240 call is 25p. This confers the right to buy 1,000 XYZ shares at 240p up to thu January uxpirX d1td. So a contract is £250 h25p x 1000). Options index 230 Headlines 201 Markets First Opt FUSE/FT30 CityHjadsP235 CEEFAX 235 Fri 13 May 21:13/48 G ALL aBOUT OPTIONS 7£££££££££££££££££££££££££££££££££££££k Buying traded options invomvju a strictly limited risk: th maxim m loss is limited to the premium gf 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 liner to equity options. $hey are cash-settled on the basis of £10 per index point. So the cost of ono index option contract iu0£10 x the premium. Options index 230 Headlines 201 Markets First Opt FUSE/FT30 CityHeadsP235 CEEFAX 235 Fri 13 May 21:16/41 ] ALL ABOU( OPTIONS Fu th details ar a ailabl in a L FFJ booklet, An Introduction to Equity and Index Options, available free of charge from: Kirsty Grant Equity Products Department LIFFE Cannon Bridge London EC4R 3XX Tel. 071-379 2486 General inquiries may bj addressed to Julian Pjurhns or Tony Dawes in th Bruin us Div l pmjnt Departm nt at LIFFE on tel. 071- 79 2486. Options index 230 SHARECHECK 220 Markets First Opt FUSE/FT30 CityHjads