Options
were introduced in 1973, when investors could write or purchase
calls on 16 different stocks. Today, investors can buy or write
calls and puts on over 2,300 different financial instruments.
While the most popular options are those on individual
stocks,
exchange traded
funds,
and stock indexes, options are also available
on limited partnership interests,
American
Depository Receipts, American Depository Shares,
government bonds, and foreign currencies.
Equity options.
The most common options are those on individual equities,
usually the stocks of widely traded companies.
Interest rate options.
These are options on bonds issued by the U.S. Treasury and
overseas governments.
Currency options.
Institutional investors with large investments abroad sometimes
purchase options on overseas currencies.
It's important
to understand the difference between equity options
and employee stock options. Unlike equity options
that are
listed
on an organized exchange and are standardized contracts,
employee stock options are individual arrangements
between an employer and an employee. Usually, stock
options grant the employee the right to purchase that
company's shares at a predetermined price after
a certain date. Employee stock options cannot be traded.
Options
were introduced in 1973, when investors could write or purchase
calls on 16 different stocks. Today, investors can buy or write
calls and puts on over 2,300 different financial instruments.
