Definitions for "Traded options"
Keywords:  speculative, option, huge, buy, hedge
Option contracts traded on an organised exchange.
Not for the inexperienced. The right to buy and sell options over shares. Take advice on the financial consequences of using such financial instruments.
Put and call options give speculators the right to purchase a share (call) or sell (put) a share at a fixed price (the strike price). The effect is that you may pay, say 20p, for the right to buy a share, any time over the next three months, at, say 200p. If the share price rises from 200p to 240p the buyer of a call at 20p would double his money. If it closed at 200p or below he would his entire stake. Traded options are simply put and call options which can themselves be traded. They have become a huge market both because they make exciting speculative instruments and because they enable investors, particularly large institutions, to hedge their positions without trading the underlying shareholdings.