One contract, a whole market, settled in cash instead of shares. This lesson shows how an index option pays, how big one contract is, and how to use an index put to protect a portfolio.
After this lesson you can
- Explain how a cash-settled index option pays
- Size an index contract from its points and multiplier
- Explain why many index options can be exercised only at expiration
- Use an index put to protect a portfolio, and know its limits
- Know which settlement value counts and how dividends flow, and avoid the five mistakes
Chapters
- 0:00One contract, a whole market
- 1:29What an index is
- 2:36Settled in cash
- 3:40Exercised only at expiration
- 4:41Which settlement value
- 5:40How big the contract is
- 6:41Protecting a portfolio
- 7:57When a spread comes apart overnight
- 8:59Dividends, as a steady flow
- 10:04Five mistakes
- 10:58The whole lesson on one screen