Many people who have not been exposed to ** or options have not understood why they can achieve the purpose of shorting spot through ** and options if they do not have **, ETF or other underlying assets on handThis is because Options Trading is actually a contract transaction, and in a contract, you can choose to act as Party A or Party B of the contract. If you are Party A, you are the buy (long) side;If you are Party B, you are the selling (shorting) party.
As a long position, i.e. the contract stipulates that at some point in the future, you have the right to buy a certain amount of the underlying asset. The short position of **, that is, the contract stipulates that at some point in the future, you have the right to sell a certain amount of the underlying asset. For example, if you are long the CSI 300 Index Index ** expiring in September, you are the party A of the contract and can buy the CSI 300 Index at a certain point in the future. Conversely, if you choose to open a position by selling, hold a short position expiring in October.
Option sauce collated and released.
A long option is a party who buys an option contract and has the option to exercise a right at expiry, which can be either a ** or a sell. If the right is exercised, it is a call option;If the right to sell is exercised, it is a put option. In the case of a short option, on the other hand, you sell an option contract, and when the long position is exercised, you must fulfill the corresponding obligations as a short.
Therefore, how do ** and options achieve shorting the target?
* Short, you can sell the underlying asset when the contract expires, you don't need to hold the actual underlying asset in your hands, you just need to act as a seller in the contract, and the underlying asset can be ** within the time specified in the contract.
For example, when the CSI 300 index is 5,000 points, you sell the CSI 300 index**, then wait for the CSI 300 index** to reach 4,000 points, and then buy it back, so you make a profit of 1,000 points. The stock index will also be around 5,000 points, not 4,000 points, because if the *** is much higher than the short selling of securities lending, there will be arbitrage opportunities, so *** will usually be around the actual **.
There are two ways to short an option:
1.Acquire the right to sell in the future, i.e. a long position in a put option;
2.Assume the obligation to sell in the future, i.e., short the call option.
For example, when the CSI 300 index is 5,000 points, if you want to achieve your goal of selling the CSI 300 in the next month, you only need to hold a long put option with a strike price of 5,000 points. Of course, you can also sell a call option with a strike price of 5000, so that if the other party chooses to exercise the right at expiration, you need to fulfill the obligation to sell at 5000, but if the actual ** is lower than 5000, the other party may not choose to exercise the right, and you can fully receive the premium.
Note that people who short the underlying of ** and options are not necessarily bearish on the speculative direction of the market, they are often because they already hold the underlying assets in their hands, and the shorting is just to hedge the risk. Whereas pure speculators, due to the low win rate, are suitable for taking risks with high odds.