An option is a contractual agreement that gives the holder the right, but not the obligation, to buy or sell a fixed quantity of a security or commodity at a fixed price within a specified period of time. It is a type of derivative that investors use to hedge their risks against market volatilities or to exchange a floating rate of return for a fixed rate of return.
Developments in financial instruments have led to a variety of hybrids, including index options. An option can either be standardized, exchange-traded and government regulated, or over-the-counter customized and non-regulated. To satisfy the need for timely options data, information, and education, a number of sites have appeared on the Internet for options traders.
Chicago Board Options Exchange (CBOE)
www.cboe.com
The Chicago Board Options Exchange (CBOE) Web site offers a wide range of information, tools, and educational materials for beginner and experienced options traders.
For those who are not familiar with options, the CBOE Web site has a Learning Center powered by the The Options Institute that provides option tutorials, on-line courses, and Webcasts. Self-guided tutorials teach users the basics of options, the intricacies of the marketplace, and the strategies used by everyday investors. On-line courses are designed to help investors gain a better understanding of the uses of listed options. The Webcast center features live interactive presentations covering various options-related topics that allow participants to interact directly with instructors.
For experienced options traders, there are a variety of resources on the Web site including trading tools, specialized index sites, different options products, and market data. Users can also get real-time quotes for $19.95 per month, plus exchange fees; there is a 14-day free trial.
Options Industry Council (OIC)
www.optionscentral.com
The Options Industry Council (OIC) Web site is devoted to educating users about options and has a variety of options information and data. The Learning Center and the Options University offer educational resources such as options basics, a glossary of options-related terms, options strategies, and free on-line courses for registered users. The OIC also offers free seminars and conferences for options traders as well as brokers.
The Web site’s Trading Desk offers useful options statistics and tools such as volume data, options quotes, symbol lookup, expiration calendar, options pricing calculator, and E-mail alerts. The Web site also has an Options Store that provides free videos, software, and literature about options.
The Options Clearing Corporation (OCC)
www.theocc.com
The Options Clearing Corporation (OCC) is the world’s largest equity derivative clearing organization. Its Web site provides a Learning Center, publications, and market data.
The Learning Center has basic and advanced sections on options. The basics half includes an explanation of options and options pricing, an options glossary, and free options literature. The advanced section covers topics such as volatility and the “greeks” and options strategies, plus offers interactive classes and free software downloads.
Publications available on the Web site include “The Characteristics and Risks of Standardized Options,” a disclosure document that all investors must read before buying or selling options. Other publications cover understanding options, options strategies, and taxes and investing. Avaiable market data includes volume data, series data, and position limit data.
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