Spread betting used on options markets
Options Markets
An option contract is an
agreement in which the buyer (holder) has the right (but not the
obligation) to exercise by buying or selling an asset at a set price
(strike price) on or before a future date (the exercise date or
expiration); and the seller (writer) has the obligation to honor the
terms of the contract. Since the option gives the buyer a right and the
writer an obligation, the buyer pays the option premium to the writer.
The buyer is considered to have a long position, and the seller a short
position.
Given that the contract's value is determined by an underlying asset and other variables, it is classified as a derivative.