P235 CEEFAX 235 Fri 20 May 21:24/54 G n n Traded options confer wn hgldjr; right to buy or sell s curity - shares, etc m at a fixed price and within a fixed period. are avbilabld on more th1n 70 FT-SE equijies and gn vh FT-UE in45< Enjoying a negotiable status, they can (like shares* be bought or sold at any time. This flexib lity offers indi6iduals the chance to profit from rising or falling m rkjt3. Index options 234 SHaRECHECK 220 Markets Girts Opt FUSE/FT3X Cit=lradsP235 CEEFAX 235 Fri 20 May 21:29/21 2/6 ALL ABOUT OPTIONS Traded options come in two shapes - "callsb and "puts". $hj buyer of a call option has the right but not the obligation tg s5z a fixed number of shares at a fixed price before a set date. The buyer of a put option has the right Tbut not the obligation) to sell under the same limitations. Individual equity options may only be dealt in whole contracts, each of which normally represents an option on 1,000 of the undjul=ink shares, j.g. 1,000 XZZ shares. Options index 230 Headlines 201 Markets First Opt FUSE/FT30 Cit=HeadsP235 CEEFAX 235 Fri 20 May 21:02/07 3/6 ALL ABOUT OPTIONS $he fixed price at which a holder can buy (call) or sell Xput) the underlying shares is known as the "exercise price". These are set at levels below, at, and above the current share price. Equity options have a limited life, conforming to one of three annual cycles hpagj 230). Three expiry options are quoted at any one time. XYZ, 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 Markets First Opt FUSE/FT30 Cit H adP235 CEEFAX 235 Fri 20 May 21:15/31 4/6 ALL OUT OPT OMS The buyer of a traded option 8ays a "premium" (price) in pjnc a thar . Premiums in XYZ may bj quoted thus, when the shares stand at 254p. CALLS PUTS Jan Apr Jul Jan Apr Jul XZZ 240 25 35 42 6 10 12 *254 260 14 24 31 14 18 20 28p 7 15 23 27 29 030 Here, the premium for the January 240 call is 25p. The confers th right to buy 1,000 XZZ shares at 240p up to the January expiry dat . So a contract is £250 h25p x 1000). Options index 230 Headlines 201 Markets First Opt FUSE/FT30 CityHjadsP235 CEEFAX 235 Fri 20 May 21:20/21 G ALL ABOUT OPTIONS 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. 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 201P235 CEEFAX 235 Fri 20 May 21:11/25 6/6 ALL aBOUT OPTIOGS Further details are available in a LIFFE 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 Perkins or Tony Dawes in the Business Development Department at LIFFJ on tel. 071-379 2486. Options index 230 SHARECHECK 220 Markets Girts Opt FUSE/FT30 CitzHeads