Interest Rate Option Trading

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The Chicago Board Options Exchange (CBOE) offers interest rate option trading. CBOE describes interest rate options as “European-style, cash-settled options on the yield of U.S. Treasury securities.” This is one of the kinds of options trading that deals solely in projected interest rates. These options trade in U.S. [...]

Determining Option Value

Determining option value can be done by evaluation of basic aspects of the option. The current market price of the underlying security, the strike price of the option, time to expiration of the option, and the cost or benefit of holding the option position all are standard factors in determining option value. The remaining basic [...]

What is an Option Worth?

The basis of options trading is to know what an option is worth. In basic terms we want to know if the difference between the strike price and the spot price will grow and in which direction. The strike price is the agreed up price that the contract will be settled for if the option [...]

Strike Prices and Spot Prices in Options Trading

If you are just getting interested in options trading you will need to learn a new set of terms. For starters options have a strike price which is also known as an exercise price and they have a spot price which is the market price when an option is exercised (at the strike or exercise [...]