The options market enables investors to develop investment strategies that reduce
the risk of negative return while maintaining the possibility of positive returns.
Since products on the options market are leveraged, investors can move large
positions with relatively small invested capital. This feature of options makes
them a useful tool for building highly speculative positions with substantial
risk while at the same time maintaining their usefulness as a hedging tool.
By combining different types and variations of options, investors can achieve
any investment strategy designed for a bull or bear market or even for stagnating
Similarly to the futures market, the options market offered through the BSE consists
of options contracts based on the following underlying instruments:
- equity indices
- individual stocks
- currency (foreign exchange)
Options products on the Exchange are standardized. The Stock Exchange sets the
parameters of options contracts in order to enhance liquidity and to mirror the
needs of different marker players. Among these parameters the type of the contract
(put / call), option style (American / European), expiration dates, contract size,
delivery method and strike prices are the most important.