What it all means and how to make sense of it:
The above shows what happens when you have registered at the ICE.com (I know it’s a pain) and you arrive at the page for LDN Equity and Index options. LDN=London in case anyone wondered.
Choose your Weapon
You might wish to look at option prices for shares-and this may be your first time. I looked at Glencore just out of curiosity, but could not see any trades I fancied. However a Glencore 270 put was trading at 11. You could sell that put,and you may get assigned the stock (it is PUT to you). So you could buy the stock for 270, minus your 11, so you’d effectively pay 259. If the stock does not go below 270,you keep the 11. You could buy the shares and sell a call too. What could possibly go wrong?
Calls on the Left Puts on the Right
Here’s the problem with equity options in the UK. Lack of liquidity. No one else is trading. The above banner shows OI VOL SET etc. These abbreviations stand for Open Interest, Volume Settle(where the price settled) Time (of the last trade) Chg-change, Last= last price, Bid= what someone wants to pay, Ask=what price level someone wants to sell at. STR= strike, the middle column.
OI does not mean oy! Well it kind of does,as in: “pay attention”
What is VITAL to look at is OI. Open Interest tells you if there is a market, and if not do NOT go there. It’s why we trade the index. Liquidity. Take a minute to look at some share options and look at the OI-you will note a big fat zero. You may try to get a quote but if nobody else is playing that game you are not likely to trade successfully.
