London Based are proud to introduce the newest website for the Financial services in the London area. Options trading.
Providing a forum and up to date information for those looking for the services of an options broker, and in turn coupling this with a forum for brokers to introduce themselves to prospective clients and build solid relationships.
London Based will keep this site updated with news and projections from the trading floors as well as taking a more granular look at individual issues that could affect options trading with a particular emphasis on the City of London.
While designing the site, we were asked many times to explain the concept of options trading – so here is a brief guide to what an option actually is;
In financial terms, an option is considered to be a derivative financial product which sets out to specify a contract between a buyer and a seller regarding future transaction on an asset at a price reference price known as a "the strike" (The price when the deal is "struck")
The buyer of the option then has the right, but not the obligation, to complete that transaction, the seller on the other hand is obliged to honour the contract.
It is common for the price to be set on a sliding scale related to the time between "the strike" and the time that the option is fulfilled. The cost of the underlying assets involved and any changes to them is also considered.
This is the most common for of option trading, however it is possible to trade on any asset class and include any number of caveats and provisos
The contract itself is executed with the phraseology "put" and "call" which reference the buyers agreement to go ahead and the vendors honouring of the agreement respectively.
In return for assuming the obligation, called writing the option, the originator of the option collects a payment, the premium, from the buyer. The writer of an option must make good on delivering (or receiving) the underlying asset or its cash equivalent, if the option is exercised.
An option can usually be sold by its original buyer to another party. Many options are created in standardized form and traded on an anonymous options exchange among the general public, while other over-the-counter options are customized ad hoc to the desires of the buyer, usually by an investment bankRead More