Options Help
Hello. I'm trying to learn about options, reading on Investopedia but what I don't get is: who actually creates options? Company?? or stock owner??
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Mkt participants, whoever they might be, really create options. The entity which is responsible for doing the work of defining all the details of the contracts is: http://www.optionsclearing.com/
So if I have some stocks, I can create option. Right???
And if you don't have them too. That's a naked call/put option.
Assuming your broker offers you all the necessary services, yes... As the other poster mentioned, you can do that even if you don't got no stocks.
Hull or Natenberg would be good places to get started.
Thanks
an option is just a contract between 2 parties. The full name is actually "option contract"
ANY 2 parties can enter into a contract. We can trade options because each party to the contract gains some potential economic value in being a party to the option contract...so other parties who want to gain the same exposure can either enter into new contracts...or they can "take out an existing party to a contract and replace them".
With Listed Options, the central clearing house is always your direct counterparty, but the clearing house really just act as an intermediary between the long and short. The initial "seller" of an option contract is the one who creates the contract...but the seller needs a buyer for the contract to actually come into existence.
You can write a contract on a piece of paper...but until somebody else agrees to enter into that contract with you...all you really have is a worthless piece of paper.
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