I’ve got a question about index options. I trade OEX and SPX contracts pretty often, but I just don’t understand this. I know it doesn’t really matter for what I do, but I was just thinking about it today.
With normal options you can actually create the contract by buying 100 shares of the stock and then writing the call. Someone sees the call, and buys it. (Simplified version)
How does it work with index options? Because they are cash based, how do the contracts get generated? Is there a set amount of contracts for each month? I understand in order for there to be a contract, there has to be the buyer and the seller. But if I’m the buyer, and you’re the seller, where did You get the contract from, and where did that person get it from before you?
2006-07-24
06:50:53
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1 answers
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asked by
bigbay00
1
in
Investing