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Market Overview

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Abstract

The options market is highly specialized, intricate, and often misunderstood. The reputation of options as high risk is only partially deserved. In fact, options products may be structured to suit any investment profile, from very high risk to very conservative, or to be used strictly to hedge risks in equity positions.

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Notes

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    Stone, G. F. (September, 1911). Board of Trade of the City of Chicago. The Annals of the American Academy of Political and Social Science, Vol. 38, No. 2, pp. 189–205.

  5. 5.

    The original 16 companies on which call options were traded in 1973 were AT&T, Atlantic Richfield, Brunswick, Eastman Kodak, Ford, Gulf & Western, Loews, McDonalds, Merck, Northwest Airlines, Pennzoil, Polaroid, Sperry Rand, Texas Instruments, Upjohn, and Xerox.

  6. 6.

    Collins, D. P. (August 16, 2016). Listed Options: A Brief History. Futures Magazine.

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    Bollerslev, T. & Mikkelsen, H. O. (1999). Long-term Equity Anticipation Securities and Stock Market Volatility Dynamics. Journal of Econometrics, Vol. 92, pp. 75–99.

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    Cao, C., Chen, Z. & Griffin, J. M. (May, 2005). Informational Content of Option Volume Prior to Takeovers. The Journal of Business, Vol. 78, No. 3, pp. 1073–1109.

  9. 9.

    Amin, K., Coval, J. D. & Seyhun, H. N. (October, 2004). Index Option Prices and Stock Market Momentum. The Journal of Business, Vol. 77, No. 4, pp. 835–874.

  10. 10.

    De Jong, C., Koediik, K. G. & Schnitzlein, C. R. (July, 2006). Stock Market Quality in the Presence of a Traded Option. The Journal of Business, Vol. 79, No. 4, pp. 2243–2274.

  11. 11.

    Selden, G. C. (February, 1902). Trade Cycles and the Effort to Anticipate. The Quarterly Journal of Economics, Vol. 16, No. 2, pp. 293–310.

  12. 12.

    Black, F. (July/August, 1975). Fact and Fantasy in the Use of Options. Financial Analysts Journal, Vol. 31, No. 4, pp. 36–41.

  13. 13.

    Chaput, J. S. & Ederington, L. H. (Summer, 2003). Option Spread and Combination Trading. The Journal of Derivatives, Vol. 10, No. 4, pp. 70–88.

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Thomsett, M.C. (2018). Market Overview. In: The Complete Options Trader. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-76505-1_2

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  • DOI: https://doi.org/10.1007/978-3-319-76505-1_2

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