Trade Index

[Eugine]

Index options are option contracts that trade against the price changes of a specific index instead of against specific stocks. Options are contracts to buy or sell the underlying security at a specific price for a set period of time.

If exercised, index options settle in cash rather than the delivery or receipt of shares of stock. Trading index options allows the trader to profit from price trends of the overall market or a specific sector without being surprised by news from a specific stock.

Index options can be traded on broad market indexes or indexes that track mathematical concepts such as the Chicago Board Options Exchange (CBOE) volatility index.