What are ETOs?

Exchange Traded Options (ETOs or Options) have the power to protect, grow, and diversify your portfolio. Depending on your Options strategy you can profit from Options regardless of share market conditions, making them a popular asset among many investors!

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A multipurpose product that offers the potential to profit in a rising, flat or falling market.

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Give you the right, but not the obligation, to buy or sell a security at a certain price before, or at, the Option’s expiration date.

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Can be used for hedging, income generation, or speculative purposes – making them versatile tools for various trading strategies.

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Allow you to buy or sell shares in a particular company or index at a certain price in the future.

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Often referred to as a derivative product as it derives its value from the price of the underlying security or index.

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Can be used to protect your existing portfolio against a fall in value or allow you to generate income from your existing portfolio.

Benefits

  • Flexibility: ETOs offer a range of strategies to suit different market conditions and investment goals.
  • Leverage: Control a larger position with a smaller initial investment.
  • Risk Management: Use Options to hedge against potential losses in your portfolio.

To learn more about the features, rates & fees, FAQs and more, log in and navigate to Products & Services > Derivatives > Options.

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Risks

Like any investment, trading Options carries an element of risk and isn’t suitable for everyone. Trading derivatives has the potential for both significant profit and loss. You should only trade Options if you are confident that you understand them and the risks involved. Before investing in Options, consider your financial position, investment objectives, and level of experience.

Options trading can be complex and requires a solid understanding of the market and a readiness to take on higher risks. While it offers flexibility and potential for profit, it’s important to invest time in learning about the various strategies and risks involved.

Options Strategies

To understand how options can be used, you may wish to review the handy articles below from the ASX Investor Updates, taking you through some worked examples.

What’s the difference between Tier 1 and Tier 2 Options Trading?

The difference between Tier 1 and Tier 2 Options trading primarily lies in the types of strategies and trades you are allowed to execute:

Tier 1 Options trading

This tier is generally for those who are new to Options trading or prefer straightforward strategies such as:

  • Covered Calls: You can sell call options on stocks you already own.
  • Buying Calls and Puts: You can purchase call and put options, which give you the right to buy or sell the underlying asset at a specified price within a certain period.
  • Long Straddles and Strangles: These strategies involve buying both a call and a put Option on the same asset with the same expiration date but different strike prices.

Tier 2 Options trading

This tier is suitable for more experienced traders who are comfortable with the additional risks and complexities involved in these strategies. It includes all Tier 1 strategies plus more complex ones such as:

  • Spreads: You can trade more complex strategies like spreads, which involve buying and selling options of the same class (calls or puts) on the same underlying asset but with different strike prices or expiration dates.
  • Selling Covered Puts: This involves selling put options while holding enough cash to buy the stock if the option is exercised.

Apply for an Options trading account now

You must have an existing Westpac Share Trading account to apply for an Options account. You are required to complete the Suitability Questionnaire within the application. Tier 1 applicants need to complete questions 1-10, Tier 2 applicants need to complete questions 1-18.

Tier 1

Exchange Traded Options Application Form

Tier 2

Tier 2 Trading Upgrade Form

Important documents

Before you decide to invest in Options, you should consider your own financial position, investment objectives and level of experience and read the following documents before making a decision to invest in Options:

This information is intended to provide information for educational purposes only and is subject to change at anytime without notice.