Options Trading And Options Markets In Turkey

1856 words - 7 pages

IntroductionDerivatives trading such as futures, forward, options, swaps and their engineered types composes the majority of financial markets in world markets. Volume of derivatives markets exceed much more that of spot financial markets those classical instruments like stock buying and bonds. the reason why this market is so popular is that they provide eliminating the future risks with current rates and provides significant speculative income even constant and declining markets. Derivatives trading in Turkey has a very short history in Turkey, by the start of TurkDEX in İzmir at the beginning of 2005. This project will give information about the most popular financial tools, options and futures, including their principles, trading mechanism and how to buy or sell futures in Turkey.OptionsThe people that buy options are called holders where those that sell options are called writers. The holder of a call has purchased the right to exercise a call. Put holders have purchased the right to sell the underlying asset at the locked price. However, neither the call holders nor put holders have an obligation to exercise their rights on the option. On the seller's side, call writers are required to sell the underlying asset when a holder exercises his right to buy. Put writers are also obligated to buy the underlying asset at the locked in price.Buying a call optionThe buyer of the call is the person who purchases a contract with the option to buy a certain stock at a certain price in a specific time window. He purchases this right from the call seller or call writer who agrees to sell his stock to the call owner at that price for that amount of time. This price in known as the exercise or strike price, and it does not change.General Characteristics of FuturesA futures contract is an agreement between two counterparties that fixes the terms of an exchange that will take place between these two counterparties at a certain future date on predetermined conditions. It is a derivative security, as its value is derived from the value of the underlying security subject to the futures contract.Futures contracts are standardized agreements to exchange specific types of good in specific amounts and at specific future delivery or maturity dates. Conventionally, there are only four contract periods per year (March, June, September and December). On the other hand, in Turkish Derivatives Exchange (TurkDEX), contract maturity periods are; February, April, June, August, October and December. However, only the three nearest by maturity of these contracts are being transacted concurrently. These standardized contracts can be exchanged between counterparties very easily through the exchange.Chicago Board of Trade (CBOT) is the oldest and largest futures exchange in the world. Thus, CBOT's organizational features have been used to illustrate the features of other derivative exchanges. In CBOT, futures contracts are traded on a central regulated exchange by open...

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