CHAPTER 8
Options
Options were originally written on commodities such as wheat and sugar. Today investors can buy or sell options on a wide range of underlying instruments in addition to commodities, including financial products such as foreign exchange rates, bonds, equities, and derivatives such as futures, swaps, and equity indexes. Contracts on commodities are known as options on physicals; those on financial assets are known as financial options.
The spectrum of trading combinations and structured products involving options is constrained only by imagination and customer requirements. Virtually all participants in capital markets have some requirement that may be met by using options. Market makers, for instance, use options for speculation ...
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