A situation in which the settlement valuation on a security changes in a way other than a linear increase or decrease. Options are common instruments with asymmetric payoff. Forwards, on the other hand, generally have symmetric payoff.Want to thank TFD for its existence. Both the call and the put have the same expiration date. Over the course of our seven-part trading course we will introduce you to the basic mechanics of not only how options work, but also how they can work for you.Before you get started trading options, we urge you to forget the stories you may have heard about how risky they are, and how some investors have gone bankrupt using them.
The truth is that options are designed to help investors limit and manage risk. Over the course of this multi-part series on options we will show you how to not only make money using options, but more important, how to save money as well.An Introduction to Options. Investors use options for two primary reasons -- to speculate and to hedge their risk. All of us are familiar with the speculation side of investing.
Every time you buy a stock you are essentially speculating on the direction.