Options on the spot and options on futures

Article Abstract:

The valuation of two kinds of options related to the same asset are compared and evaluated: options on the asset itself and on the futures on the asset. Explaining the differences between the values of two options relies considerably on the early exercise privilege, with it shown that in the case of a cash instrument that does not make interim payments (gold, for example), the value of a call option on the spot is smaller than the call option on the futures contract, and that the opposite is true for put options. The early exercise boundaries characterizing when it pays to exercise are evaluated and compared.

Research, Models, Financial futures, Capital assets, Commodity futures, Commodities

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The price of options illiquidity

Article Abstract:

This article evaluates the effect of illiquidity on currency options by exploring circumstances where options are not traded prior to maturity and are issued by a central bank. The value of currency options are compared to exchange options, finding that nontradable options sell for less than exchange traded ones.

Statistical Data Included, Currency options, Central banks, Liquidity (Finance)

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The contribution of market makers to liquidity and efficiency of options trading in electronic markets

Article Abstract:

The efficiency and liquidity of options market and the influence of market makers on this is analyzed.

Evaluation, Options (Finance), Market makers (Securities trading)

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