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Alpha Indexes Options by D este
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Alpha Indexes Options |
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Investment
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The new NASDAQ OMX Alpha Index options are, option traders first should be familiar with what the Alpha term actually stands for; According to Investopedia.com, there are two definitions of Alpha. The first dictionary definition states that Alpha is "A measure of performance on a risk-adjusted basis. Alpha takes the volatility (price risk) and compares its risk-adjusted performance to a benchmark index." This dictionary definition points out the fact that the performance of any underlying, or a portfolio, can be compared to something else which always acts as a benchmark. The majority of the US Hedge fund managers compare their performance against the S&P 500. The second Investopedia definition talks a bit more into the specifics by stating that, "A positive alpha of 1.0 means the fund has outperformed its benchmark index by 1%. Correspondingly, a similar negative alpha would indicate an underperformance of 1%." From this segment it is clear that these calculations are done in percentages rather than in actual dollar amounts or points. NASDAQ OMX Alpha Options Lets take a look to the new NASDAQ OMX Alpha Index options. There are seven tradable Alpha option products. The NASDAQ OMX thoughts is to have in the near future a total of 19 products and then later, more options to trade. This is like the same of the 1970s when call options had a similar start for option traders to trade. They started with only twelve optionable products. Then as calls were added to more underlying, puts came into existence with puts being eventually added to every optionable product.
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