CandleFocus Glossary Editor
Investing in the modern world has become incredibly complex, offering a plethora of opportunities for curious traders. One such investment vehicle, options, offer investors the chance to leverage their capital by taking positions in a securities markets more easily. Options offer investors the opportunity to access the underlying asset, like a stock or index, at a given price and on a given timeline. The various option contracts available to investors are divided into ‘option series’.
An option series is a collection of options that all share the same underlying asset, expiration month and strike price. In essence, this means that all the options in a particular series have the same features, such as the same expiration date and the same right to buy or sell the underlying asset at the set strike price. Option series are grouped into an option class, which refers to the option’s designation as either a call or a put.
Option series offer order book liquidity and improved pricing opportunities to traders. The availability of multiple option series on one underlying asset allows traders to have a range of trading strategies at their disposal, all with different risk/return profiles. For example, if a trader is bullish on a particular stock and wants to invest, they can invest in a call option at the strike price of their choosing, with the expiration month that serves their needs.
Aside from the ability to adjust their risk/return profile to suit their own goals, investors can also maximize their profits by taking advantage of the liquidity that exists in option series. Since the options in an option series are similar to one another, the moverments of an options market should generally be consistent across the whole option class. This allows traders to more accurately price their trades, as the cost of buying and selling the same security can often be different on different option series.
Overall, option series are an important element of investing in options. By offering investors access to multiple different options on the same underlying asset, option series provide traders with a range of potential strategies that they can utilize to meet their goals. With the liquidity of the markets and the improved pricing opportunities available, option series are an invaluable asset to any serious investor.
An option series is a collection of options that all share the same underlying asset, expiration month and strike price. In essence, this means that all the options in a particular series have the same features, such as the same expiration date and the same right to buy or sell the underlying asset at the set strike price. Option series are grouped into an option class, which refers to the option’s designation as either a call or a put.
Option series offer order book liquidity and improved pricing opportunities to traders. The availability of multiple option series on one underlying asset allows traders to have a range of trading strategies at their disposal, all with different risk/return profiles. For example, if a trader is bullish on a particular stock and wants to invest, they can invest in a call option at the strike price of their choosing, with the expiration month that serves their needs.
Aside from the ability to adjust their risk/return profile to suit their own goals, investors can also maximize their profits by taking advantage of the liquidity that exists in option series. Since the options in an option series are similar to one another, the moverments of an options market should generally be consistent across the whole option class. This allows traders to more accurately price their trades, as the cost of buying and selling the same security can often be different on different option series.
Overall, option series are an important element of investing in options. By offering investors access to multiple different options on the same underlying asset, option series provide traders with a range of potential strategies that they can utilize to meet their goals. With the liquidity of the markets and the improved pricing opportunities available, option series are an invaluable asset to any serious investor.