Options Trading and Options Markets in Turkey

Essay by ozgurmadranUniversity, Bachelor'sA-, August 2009

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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 Ä°zmir 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...