You are here: HomeOptionsDefinition and CharacteristicsWhat are the Distinguishing Features of Different Options Markets?

What are the Distinguishing Features of Different Options Markets?

Options can be divided into exchange-traded options (for example at Eurex Exchange ) and options traded outside exchanges ("over-the-counter" or "OTC" options).

In addition to the options traded at Eurex Exchange, warrants are traded on Deutsche Börse´s cash market.

Important trading places for warrants in Germany are in Frankfurt Scoach and in Stuttgart the Euwax.

Differentiation 1: Trading location

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In all cases, we are dealing with options. In detail there are, however, numerous differences - between Eurex Exchange options and warrants, for instance.

Criteria for differentiation Eurex Options Warrants
Issuer No fixed issuer, Eurex stipulates contract specifications Banks/securities trading firms
Lifetime Lifetimes of up to 120 months,always set expiration months Lifetime mostly 1-2 years, no set expiration months
Exercise prices Exchange stipulates minimum quantity of exercise prices, plus automatic introduction of new exercise prices depending on market conditions No set rules, exercise prices are chosen by issuers
Trading Trading at Eurex Exchange, several market makers for each product Trading on the cash market
in Frankfurt: Scoach (trading system Xetra)
Prices quoted by specialists
Possible trading positions Both long and short positions are possible,
with a total of 4 basic options positions:
  • Long call
  • Short call
  • Long put
  • Short put
Only long positions are possible (the issuer is also the seller), with a total of 2 positions:
  • Long call
  • Long put

The advantages of Eurex Exchange options are evident:

  • Exercise prices in line with market requirements are available at any time
  • Maximum lifetimes
  • Generally several market makers for each product
  • In contrast to warrants, both long and short positions are possible

Differentiation 2: Underlying market

Another criterion for the differentiation of options is the market where the respective underlying instrument is traded. Options based on a derivative are called "options on futures". If, on the other hand, the underlying instrument is a cash market position, the options are referred to as "cash options".

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Differentiation 3: Underlying instrument

Cash options can be further classified according to their underlying instrument. With options based on goods or raw materials (such as cereals or precious metals), we speak of commodity options. If the underlying instrument is a financial instrument, such as equities, currencies or equity indices, we speak of financial options.

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