Listed Options and Futures are standard forward transactions that are traded on exchanges.

In principle, the application neither recognizes the exchanges nor the finance products. The system only recognizes them after you have defined them in Customizing.

The exchange acting as the institution whose infrastructure allows free trading with these contracts, collects collateral provisions from trading parties on the exchange in the form of additional (initial), premium, spread, and non-spread margin payments. For futures and future styled options, gains and losses are calculated daily (valuation margin) and cleared immediately. In this case, the name variation margin, is misleading since margins are not included, rather actual gains and losses.

The terms, Purchase and Sale, do not describe the increase or decrease of positions here but they define the side of the forward transaction. Positions are generated both by purchases and by sales.

The increase and decrease of positions is represented by Open and Close.

The decrease of the position occurs via a counter transaction with the same class and the same indicator of this transaction as the offsetting transaction (Closing). The possibility of leaving the market at any time by means of an offsetting transaction without having to get the counterparty to agree is one of the two most important characteristics of listed options and futures as opposed to options and futures in the OTC area. The second most important characteristic is the strict standardization of the contents of the contract

For more information, see:

• Transaction entry