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Options Market

In: Business and Management

Submitted By jaymang
Words 2751
Pages 12
Options Markets
Options Markets
Prepared By:

Daniel Bielewicz
Jomark Manglicmot
Juan Mendez

December 1, 2014
Prepared By:

Daniel Bielewicz
Jomark Manglicmot
Juan Mendez

December 1, 2014

Table of Contents

Page

Introduction 2 Options Market 2 Market Makers 4 Equity Market 6 Conclusion 9 Works Cited 10

Introduction The options market is directly linked to the U.S. economy in many ways. It plays a huge role in various markets and institutions and is reflective of its underlying assets. In this case we will discuss the various issues regarding the options market and how it affects U.S. markets and institutions. This includes a breakdown of the options market, the market makers’ role, and how the options market affects the equity market.
Options Market
Nowadays, many investors’ portfolios include investments such as mutual funds, stocks, and bonds. But that is not all there is for investors to invest in. Another method of investment is called options, and it brings a world of opportunities for investors. However, options are complex securities and can be extremely risky. Options, as the name implies, give the option to the buyer to either sell or buy a stock for a given price. The right to buy stock at a given price is called a “call option” and the right to sell it is called “put option”. Options were designed to take advantage of the volatility in the market and are used by investors to speculate on the price movements of the underlying stock, to adjust risk and returns of their portfolios, and even for hedging purposes (Milton 2014). There are investors that go even further and exclusively trade options rather than a combination of options and stock. This allows them to save on transaction costs, avoid tax exposure, and market restrictions. Over the years, options have been getting

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