If you’re a trader in Singapore, you’re likely aware of the many types of options available to you. But how familiar are you with each type? We’ll give you an overview of the most common types of listed options available on the SGX; and if you are interested find them here.
What are the different types of listed options that you can trade in Singapore?
Here is an overview of the most common types of listed options available on the SGX.
Call Options
A call option is an agreement that gives the buyer the right, but not the obligation, to buy a specified asset at a specified price on or before a specified date. The underlying asset can be a stock, index, commodity, or currency. Call options are typically used as a speculative tool to invest in an asset that is expected to rise in price.
Put Options
A put option is an agreement that gives the buyer the right, but not the obligation, to sell a specified asset at a specified price on or before a specified date. The underlying asset can be a stock, index, commodity, or currency. Put options are typically used as a speculative tool to invest in an asset that is expected to fall in price.
Bullish Call Options
A bullish call option is an agreement that gives the buyer the right to buy a specified asset at a specified price on or before a specified date. The underlying asset can be a stock, index, commodity, or currency. Bullish call options are typically used as a speculative tool to invest in an asset that is expected to rise in price.
Bearish Put Options
A bearish put option is an agreement that gives the buyer the right to sell a specified asset at a specified price on or before a specified date. The underlying asset can be a stock, index, commodity, or currency. Bearish put options are typically used as a speculative tool to invest in an asset that is expected to fall in price.
Straddles
A straddle is an options strategy that involves buying both a call option and a put option on the same underlying asset with the same strike price and expiration date. Straddles are typically used as a speculative tool to invest in an asset that is expected to move dramatically at a price, but the direction of the move is uncertain.
Synthetic Options
A synthetic option is an options strategy that involves creating a “synthetic” long or short position in an underlying asset by combining a call option and a put option. Synthetic options are typically used as a speculative tool to invest in an asset when the direction of the price move is uncertain.
Covered Calls
A covered call is an options strategy that involves buying a stock and simultaneously selling a call option on the same stock. Covered calls are typically used as a conservative way to generate income from stocks that are not expected to rise in price.
Combinations
A combination strategy involves combining two or more options positions to create a new position. Combinations are typically used to speculate on the market’s direction or hedge against risk.
Spreading Strategies
A spread is an options strategy that involves buying one option and selling another option on the same underlying asset with different strike prices and expiration dates. Spreading strategies are typically used to speculate on the market’s direction or hedge against risk.
Strangles
A strangle is an options strategy that involves buying a call option and a put option on the same underlying asset with different strike prices and expiration dates. Strangles are typically used as a speculative tool to invest in an asset that is expected to move dramatically at a price, but the direction of the move is uncertain.
Collars
A collar is an options strategy that involves buying a stock, simultaneously buying a put option, and selling a call option on the same stock with different strike prices and expiration dates. Collars are typically used to protect the value of a stock that is not expected to fall in price.
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