Business and Personal Finance Dictionary

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• INDEX OPTION
  
  Index options give investors the chance to make (or lose) money by anticipating the gains or losses in an industry group or a broader segment of the market. For example, an investor who thinks technology stocks are going to fall can buy a put option on a technology index rather than selling short a number of different technology stocks. However, since changes in an index are difficult to predict, index options tend to be very volatile. And the further out the expiration date for exercising an index option, the more volatile the option tends to be. Most trading in index options takes place on the New York Stock Exchange (NYSE), the American Stock Exchange (AMEX), and the Chicago Board Options Exchange (CBOE).
  
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