{"id":57076,"date":"2024-12-12T15:47:45","date_gmt":"2024-12-12T14:47:45","guid":{"rendered":"https:\/\/www.captrader.com\/?post_type=glossar&#038;p=57076"},"modified":"2024-12-12T15:47:46","modified_gmt":"2024-12-12T14:47:46","slug":"silent-partnership-businesses","status":"publish","type":"glossar","link":"https:\/\/www.captrader.com\/en\/glossar\/stillhaltergeschaefte\/","title":{"rendered":"Standby transactions"},"content":{"rendered":"<p class=\"wp-block-paragraph\">Should you be <a href=\"https:\/\/www.captrader.com\/en\/tradable-products\/options\/\">Options<\/a> want to trade, you may be interested in covered options. In this article, you will find out how such transactions work, what potential losses there are and what possible advantages and disadvantages you should expect when trading such options.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Option writer transactions Options<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">A writer is the seller of an option. This can be a <strong><a href=\"https:\/\/www.captrader.com\/en\/glossary\/glossary-put-options\/\" data-type=\"glossar\" data-id=\"45201\">Put<\/a>- or <a href=\"https:\/\/www.captrader.com\/en\/glossary\/glossary-call-option\/\" data-type=\"glossar\" data-id=\"45202\">Call<\/a>-option<\/strong> trade. To this end, the seller offers to buy or sell the underlying asset at a predetermined time if the buyer exercises the right.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In return for this <strong>Commitment <\/strong>the buyer pays the writer <strong>one <\/strong>Premium. The profit of the writer is calculated by deducting the transaction costs from the amount of the premium.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The term option writer refers to the tactic behind it. The seller offering the option waits to see whether the buyer wishes to exercise his right or not. He wants to profit specifically from the premium paid out by the buyer.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It is therefore a <strong>Speculation<\/strong>. The seller or writer of a call option speculates that the price of the underlying asset will not rise above the strike price of the option on the expiration date. With a put option, on the other hand, he speculates that the price of the underlying asset will not fall below the price of the option.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Basically, a distinction can be made between two forms of writer transactions:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Covered covered options<\/strong>These are hedged options. This means that the seller of the option holds the underlying asset or the corresponding financial resources should the buyer insist on his right and exercise the option<\/li>\n\n\n\n<li><strong>Uncovered writer transactions<\/strong>The risk of these options is higher, as it is theoretically unlimited for sold call options. There are no hedges<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Short positions and potential losses<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">As already mentioned, writer transactions can take the form of a put or call option. In the case of a <strong><a href=\"https:\/\/www.captrader.com\/en\/glossary\/call-option\/\" data-type=\"glossar\" data-id=\"45202\">Call option<\/a><\/strong> ist das <strong>Risk <\/strong>of a loss <strong>unlimited in theory<\/strong>. There is a particular risk if the seller does not own the actual underlying asset.\u00a0<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The writer may have to buy the underlying asset if the buyer exercises his right and wishes to exercise the option. If the price of the underlying asset has risen significantly in the meantime, the seller must pay a very high price. <strong>pay a high price<\/strong>.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">At <strong><a href=\"https:\/\/www.captrader.com\/en\/glossary\/put-options\/\" data-type=\"glossar\" data-id=\"45201\">Put options<\/a><\/strong> the risk is high if the <strong>Underlying lost significant value towards the end of the option term<\/strong> has. Although buying on the market would be cheaper, the writer has to buy the asset from the buyer of the option. The initial premium received will usually not be able to cover this loss.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For <strong>Buyer <\/strong>ist das <strong>Risk with put options<\/strong> for such writer transactions <strong>lower <\/strong>than for the writer. The buyer's potential losses are limited to the premium paid and other fees.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Cover options and their advantages and risks<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Short positions are concluded with the following<strong> Advantages and opportunities <\/strong>accompanied:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Right at the beginning, the seller receives a premium in return for the commitment he has made<\/li>\n\n\n\n<li>Put options make it possible to profit from rising prices of the underlying asset<\/li>\n\n\n\n<li>Call options make it possible to profit from downward or sideways movements in the price of the underlying asset<\/li>\n\n\n\n<li>Towards the end of the term, writers can increasingly profit from the loss of time value<\/li>\n\n\n\n<li>Under certain conditions, it is possible to buy back the option at a profit before the expiry date<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Also the <strong>potential risks<\/strong> of option writer transactions should not be disregarded:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Depending on the choice of underlying, high volatility can be expected<\/li>\n\n\n\n<li>Put options can lead to high losses if the option is exercised at an expensive price after prices have fallen and the writer has to buy the underlying asset at a high price<\/li>\n\n\n\n<li>After call options, there is a risk of high losses if the underlying asset has risen sharply and was not purchased in advance<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Signals for option writer transactions<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">There are a number of signals that can indicate whether an option is likely to be exercised or not. It should be borne in mind that the <strong>Reliability <\/strong>of these signals <strong>restricted <\/strong>is. Possible signals include the following aspects:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>If there are few open positions, this could be an indication that the buyer will not be able to exercise the option<\/li>\n\n\n\n<li>A small <a href=\"https:\/\/www.captrader.com\/wp-content\/uploads\/2021\/06\/captrader_implizite-volatilita\u0308t.jpg\" data-type=\"attachment\" data-id=\"7556\">Volatility<\/a> could be seen as an indication that the underlying asset could rise in the future. Hedging by the writer could be an option<\/li>\n\n\n\n<li>High premiums could be an indication that the buyer cannot exercise the option<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Conclusion: Achieve returns with short positions<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">In summary, covered option transactions are transactions in which the <strong>Seller of an option waits<\/strong>whether the buyer wishes to exercise his rights and exercise the option.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This is a <strong>Speculation<\/strong>. With call options, the risk for the seller of the option is practically unlimited, especially if the writer does not own the underlying asset. Put options can be risky if the underlying asset has fallen significantly in value at the end of the term. Depending on the underlying asset, high volatility can be expected, which makes planning more difficult.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The typical advantages of covered option transactions include the paid out <strong><a href=\"https:\/\/www.captrader.com\/en\/glossary\/option-premium\/\" data-type=\"glossar\" data-id=\"45195\">Premium<\/a> <\/strong>for the commitment entered into, the possibility of profit through the <strong><a href=\"https:\/\/www.captrader.com\/en\/glossary\/time-value\/\" data-type=\"glossar\" data-id=\"45192\">Time value loss<\/a> <\/strong>or the <strong>Opportunity to buy back <\/strong>before the expiry date.\u00a0<\/p>","protected":false},"author":20,"featured_media":0,"template":"","class_list":["post-57076","glossar","type-glossar","status-publish","hentry"],"acf":{"blog_summary":"","blog_faq_schalter":"nein","faq_uberschrift":"","blog_faq_loop":null},"_links":{"self":[{"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/glossar\/57076","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/glossar"}],"about":[{"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/types\/glossar"}],"author":[{"embeddable":true,"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/users\/20"}],"wp:attachment":[{"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/media?parent=57076"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}