Definition
The term listed option refers to a put or a call that is traded on a national exchange. Listed options are of two standardized types: American options and European options.
Explanation
Also known as an exchange-traded option, a listed option is one that is sold on a national exchange such as the Chicago Board Options Exchange, Chicago Board of Trade, the NASDAQ, and New York Stock Exchange. Listed options will be standardized with respect to contract size. The option will also clearly state the terms of the agreement, including the exercise price and expiration date.
Listed options include both American options, which can be exercised at any time before expiration, and European options, which can only be exercised at expiration. Options that are traded over-the-counter are not listed options. The terms and conditions of over-the-counter contracts are not standardized and the marketplace is relatively illiquid when compared to national exchanges, where listed options are traded.
Related Terms
- The term technical analysis refers to a forecasting methodology that attempts to predict future price movement based on historical price patterns. Technical analysts will examine a security's past prices, trading volumes, open interest, as well as short selling when predicting future price direction.
Moneyzine EditorNovember 6th, 2024 - The term open outcry refers to a communication method occurring between members of a stock or futures exchange. Open outcry uses a combination of shouting and hand signals to exchange buy and sell order information.Moneyzine EditorNovember 6th, 2024
- The term naked option refers to a trading position where the seller of the option does not own any, or all, of the underlying assets specified in the contract. A trader entering into a naked option will be forced to purchase the underlying asset if notification of assignment is received.Moneyzine EditorNovember 6th, 2024
The term married put refers to an option strategy involving the purchase of an at-the-money put and simultaneous purchase of the equivalent underlying asset. Married puts are used when the investor is bullish on the underlying asset, but would like downside protection in the near term.Moneyzine EditorFebruary 8th, 2024
