Q Why should wealth managers trade US-listed equity options instead of buying potentially safer US mutual funds? A There are a number of reasons. Firstly, the equity options are extremely liquid and transparent, so you can see how the product is constructed, you can mark to market and you can trade in and out. Also, options give you a non-linear return; so you can structure the product you're trading by using varieties of puts and calls. A put gives the owner the right to put away or sell the underlying, or part of it, at a set price before a specified date - a call is the opposite, giving the owner the option to call the stock, or buy it. You can do that at the same price as the current market price, 'at the money' or you can do it at strike price, exercise prices above or below the market. So options can be 'out' or 'in' the money.
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