Posted in Finance, Accounting and Economics Terms, Total Reads: 278
Definition: Registered Options Trader
A Registered Options Trader is a person who deals in options and observes a specific number of options being traded at that time on the exchange fairly in the market. Speculators are those who leverage on stock options by trading at the right time and investors usually trade options to hedge risk in their investments. Option trading is done using call and put options of shares which give the investors a right but not the obligation to use the option.
A call option gives the investor a right to buy shares at the strike price (i.e. specified price initially fixed between investor and the financial institution) before the date of expiry. A put option gives the investor to sell shares at the strike rate rather than at the spot price.
All the different options being traded on the exchange daily are scrutinized by a Registered Options Trader who works at the Exchange to ensure no arbitrage or fraud.
The Registered Options Trader can trade for self or for third parties but cannot become a market maker by misusing his/ her advantage.