Origins of Options
Options have been used since ancient times. The first historical transaction in options was done by the ancient greek mathematician and philosopher - Thales of Miletus, who exercised 'option' (a right) to rent out a certain number of olives at a much higher price than the initial purchase price.
Exchange traded options started in 1973 as a part of the financial instrument class. Today, over-the-counter options like bilateral, customised contracts between a single buyer and seller are in existence as well. However, this being the first time that options are introduced in the Indian commodities market.
What are Options?
Commodity option is a financial derivative instrument better suited for risk-averse groups like farmers as there is no margin calls for buying options. It is a beneficial tool to hedge and speculate by limiting the risk factors. Options, when used along with the spot and futures can help develop an efficient risk management strategy for various market participants.
Options - Is it your cup of tea?
Options are not at all intimidating as they may sound. Rather, they are easy to understand.
The NICR's Options Certification Course will help you learn options in a simple and easy way.
What will you learn in the NICR's Options Certification Course?
NICR, a non-profit educational institution dedicated to promoting research and awareness in the commodity market runs the Options Certification Course encompassing following three modules:
□ Module 1: Beginners
- A beginner's module, designed to impart basic know how on options – meaning, utility and practical use of options.
- Understand basic options terminologies.
- Understand how options are different from futures and their payoff profile.
- Understand the intuition behind pricing of options using simple analogies.
- Basic understanding of realised volatility, implied volatility and the Black Scholes Model.
□ Module 2: NCDEX Specific
- This being a NCDEX specific module, it covers options from NCDEX perspective, covering aspects of margins, expiry, position limits, price limits and advanced expiry strategies.
- Volatility based trading strategies that are useful in managing options portfolios.
□ Module 3: Advanced
- This being the module for students who have some basic understanding on options.
- Understand risk factors in options (sensitivities or option Greeks).
- Understand different strategies to lower the risk and earn profit.
- Learn about volatility smiles, skews and management of options positions during expiry (including CTT impact).