Mechanics of Options Markets (FRM Part 1 2023– Book 3 – Chapter 11)

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After completing this reading, you should be able to:
- Describe the types, positions variations, and typical underlying assets of options.
- Explain the specification of exchange-traded stock option contracts, including that of non-standard products.
- Describe how trading, commissions, margin requirements, and exercise typically work for exchange-traded options.

0:00 Introduction
1:31 Learning Objectives
1:41 What is an Option?
5:49 Call vs. Put Options
8:07 Positions Variations
14:31 Underlying Assets
17:06 Expiration and Strike Price
19:23 Moneyness
20:39 Intrinsic Value and Time Value
22:55 Non-standard Products
29:41 Market Makers, Trading Commissions, and Margin Requirements
31:23 Book 3 - Financial Markets and Products Chapter 11