I am considering buying one or more XJO index contracts (ETOS) as a hedge against any significant downside of my main share portfolio...
Now if I purchase say 1x contract XJOVD (June 08 expiry, 4500 points).. for $x, say it's May or so and say the XJO is then 4900 points and looks like not much chance of being in the money. At that point obviously I'd expect the price quoted to be much lower than now.
However, am I able to "sell to close" the option at that price in May? or am I 'stuck' with the option until June expiry (where it will probably expire worthless). While the ASX literature says I can sell the contract before expiry, is this actually possible in practice? Who will purchase the other side from me if I do attempt to sell?
Will the market maker do so at their discretion if I put an ask price out there ? (would they bother if it's already so "out of the money"?) or do I have to hope some other punter comes along and buys my contract(s) for the price I'm asking?
My main question I guess is are these index options a "all or nothing" investment at the moment as traded on our ASX Options market?? Once placed, am I able to receive a fraction of the original buy back later on if closed? or do I have to accept "if wrong" I lose the entire amount paid for the contract?
Any practical experience from those who have traded index options on our ASX would be great...