The Differences of Index and ETF Options
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Do you prefer using index options versus the options on the ETF for the index? If so, why? What are the similarities and differences that one should be aware of when using index options? Thanks!
Rene-
Thanks for the question Rene. The two biggest things you want be aware of when trading index options are the style of option and the details of settlement. Within the CBOE website you can view the product specifications of the various index options. I suggest spending some time on the site getting familiar with any index options you plan on trading.
Style of Option: Since the ETF's have underlying shares you can purchase, their options are typically American Style which means they be exercised any time prior to expiration.
Read the full article: http://tylerstrading.blogspot.com/2009/12/mail-time-index-vs...
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