Trova il tuo prossimo podcast preferito

Abbonati oggi e leggi gratis per 30 giorni
#402 - Why Do Option Contracts Offer Multiple Strike Prices And Expiration Dates?: Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we're going to answer the question, “Why do option contracts offer multiple strike prices and expiration dates?” And the simple answer here is...

#402 - Why Do Option Contracts Offer Multiple Strike Prices And Expiration Dates?: Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we're going to answer the question, “Why do option contracts offer multiple strike prices and expiration dates?” And the simple answer here is...

A partire dalThe "Daily Call" From Option Alpha


#402 - Why Do Option Contracts Offer Multiple Strike Prices And Expiration Dates?: Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we're going to answer the question, “Why do option contracts offer multiple strike prices and expiration dates?” And the simple answer here is...

A partire dalThe "Daily Call" From Option Alpha

valutazioni:
Lunghezza:
4 minuti
Pubblicato:
Oct 29, 2018
Formato:
Episodio podcast

Descrizione

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we're going to answer the question, “Why do option contracts offer multiple strike prices and expiration dates?” And the simple answer here is variety. I could’ve said options, but that would be too simple because we’re talking about options contracts, but the answer here is just variety. And I often relate this to either grocery stores or cars, but in our world, we see that there’s hundreds, if not, thousands of different kinds and models and trim packages of cars out there, so if you want to get a car, there's no one standard car you could buy. You could buy this brand or that brand. You could get a truck, an SUV, a sports car, a convertible, a not convertible, whatever. And so, this variety allows people to choose based on their preference of what they want. They can choose to pay a higher amount of money to get a car that moves faster. They can choose to pay more money to get a car that's more reliable. It comes down to variety and preference. And the same thing happens in the options market. When you have multiple strike prices either in the same contract month or in different expiration dates because you can also have multiple expiration dates, it allows traders to pinpoint their exact preference and use the variety of the options market to get them into the contract that they specifically want to be in for that time period at that price level. And potentially, no true traders are going to be exactly the same all the time. You might think, for example, if you’re going to go out and buy a put option to try to hedge one of your stock positions, well, trader A might think that the stock is going to go down 10%, trader B might think that the stock is also going to go down 10%, but might think that that 10% move might happen in a year versus trader A thinks that move is going to happen in two weeks. And so, you have two different traders with two different preferences on what they want to trade. Maybe at the same strike price, maybe at different strike prices, but maybe at different expiration dates than somebody else might be trading. It all comes down to variety. It just allows the options market to be more robust, to be larger, to be more efficient because it allows people to get into the exact contracts that they want at the exact timeframe that they’re looking to trade. This is one of the things that I actually love about the options market in general, is that unlike stocks which just have one price and then you can choose from a lot of securities, but the stock price is the stock price. With options, you have the ability to choose where you're going to trade and on what timeline. And so, you have a lot more flexibility I think in creating and crafting and building strategies that ultimately end up paying out based on the market dynamics that you think are going to play out in the future. As always, hopefully this helps out. If you have any questions, let us know and until next time, happy trading.
Pubblicato:
Oct 29, 2018
Formato:
Episodio podcast