The versatility of index options stems from the variety of strategies available to the investor. The following examples explain most basic uses of index options. These examples are based on hypothetical situations and should only be considered as examples of potential trading approaches. Other strategies used with equity options, such as spreads and straddles, can be employed with index options. For more detailed explanations, contact OIC Investor Services, your brokerage firm or the exchanges where index options are traded.
Goal: Positioning to profit from an increase in the level of the underlying index.
Goal: Positioning to profit from a decrease in the level of the underlying index.