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Definition

<p style="text-align: justify;">These are <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">call</span> or <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">put</span> <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">options</span> on individual well-traded <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">blue chip</span> <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">shares</span> listed on the <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">JSE</span> or specific JSE/<span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">FTSE</span> <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">indexes</span>. The buyer of an <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">option</span> has the right, but not the obligation to buy (call) or sell (put) a specific <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">equity</span> or <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">index</span> at a specific price and on a specific date. These are <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">derivative</span> <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">instruments</span> whose value is <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">leveraged</span> to the price of the underlying instrument in the market. The worst loss that the holder of an option can suffer is the cost of the option in the event that he/she chooses not to <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">exercise</span> it. The advantage of an option is that it enables the holder to benefit from movements in the share's  or index's price without having to own it. Options are leveraged ten-fold and <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">marked to market</span> at the end of every day. Options are used to <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">hedge</span> large stock positions or to <span class="glossary" style="border-bottom: 1px dotted black; cursor: pointer;">speculate</span>.</p>