Exercise 100 Points Trading
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What is Exercise Price Strike? The strike price is the predetermined price at which you buy in the case of a call or you sell in the case of a put an underlying make money online buy traffic contract when the option is exercised. Strike Price Ranges When trading options you can choose from a range of strike prices that are set at predefined intervals by the exchange.
The interval range may vary depending on the underlying futures contract.
Each option product will have a unique price interval rule that is based on the product structure and the needs of the market. Not only will products have varying intervals, but also within certain products, the intervals will change depending on the expiration month.
For example, options on corn futures have an interval of 5 cents for the two front months, of the expiring futures contract and then transition to 10 cent intervals for contracts 3 months and beyond. Over time the entire range may expand beyond the initial listed boundaries, due to large market movements.
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In addition, strike intervals can become more granular as options move closer to expiration. Example Strike Price Range In our example we are going to look at a fictional contract with a December expiration.
At outset of the option contract, the price rule dictates a 10 point interval and a 40 point range.
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Assume the underlying futures contract is trading around points, the option price range will be set at 80, 90, and As the price of the underlying futures contract moves, the exchange will monitor and adjust the range of strike prices. After the first quarter the futures market fell to 83 points, therefore another strike price at 70 was made available.
In the third quarter the futures contract rallied higher.
The option contracts are now much closer to expiration and have increasing Exercise 100 Points Trading activity. To meet demand, additional strike prices at one point intervals are made available between 80 and By the last quarter the market continued upward and additional one point intervals were needed between and Additional information More information on options, including exercise intervals, can be accessed on CME Group product pages.
Updated Mar 21, What is an Index Option? No actual stocks are bought or sold. Index options are always cash-settledand are typically European-style optionsmeaning they settle only on the date of maturity.