In fact, everything can be an option, and everyone only needs to understand this sentence to understand what an option is. Literally: "period" is the term, "right" is "power", and the combined interpretation is "the right that can be exercised in a certain period of time in the future". This article will explain what options are to friends who are interested in options but have never been exposed to options in plain and concise language.
What is an option?
An option is a kind of financial derivative that gives its purchaser the right to purchase or a certain amount of a certain financial asset (called the underlying asset) within a specified period of time according to the agreement between the buyer and the seller (referred to as the agreement or execution). An option contract involves at least two parties: the buyer and the **person. The holder has rights but not obligations.
Options trading is essentially a kind of right trading, and the buyer of the option obtains the right to sell the underlying asset after the option. This right is an option, and the buyer can either exercise** or sell the underlying asset within the agreed period, or waive the right to exercise the right, and the seller must perform when the buyer chooses to exercise the right. If the buyer does not exercise the option after the expiration date, the option is void and the rights and obligations of the buyer and seller are discharged.
The main components of an option:
Underlying Asset, Premium, Execution**, Maturity Date, Type of Right, Transaction Entity.
*What is the connection with options?
*, is part of the ownership of a company, is a virtual asset, **market transactions, is this virtual asset. An option is a right to buy and sell the underlying thing. The underlying of an option can be **, or an ETF, an index, or an **, or an interest rate or exchange rate. Correspondingly, there will be ** options, ETF options, index options, ** options, interest rate options and exchange rate options.
According to the different rights to buy and sell the underlying object, it can be divided into call options and put options. A call option gives the holder the right to agree on the underlying for a certain period of time, while a put option gives the holder the right to sell the underlying for an agreed amount of time for a certain period of time.
The right is not free, whether it is a call option or a put option, there is a **, so it can also be traded. For **, for those who hold call options, they can sell the agreed amount of *** for a certain period of time, while those who hold put options can sell the agreed amount of ** for an agreed ** within a certain period of time. In other words, yes is tradable, and so are options.
The definition of buying a call option (also called a call option) is:When the expected target *** investor can choose **call option, use less capital to obtain the leverage income brought by the target.
**A put option (put option) is defined as:When an investor expects the underlying to fall, he or she can choose a put option.
So what are the advantages of options over **?
Options can have a place in the financial market, mainly because of the following three advantages:
First, there are more trading opportunities
Compared with **, options are two-way trading products, which support short operation, and have a lower threshold than margin trading, which is not as difficult to operate as short trading. And it itself is closely related to the ** market, so at *** time, it is naturally the best opportunity to make money from put contracts!
Second, the risk is more controllable
Options allow investors to avoid market risk by allowing investors to buy the underlying asset at a certain time in the future with the *** or the right to buy the underlying asset.
3. The limit of the rise and fall is different
* The market has a limit on the rise and fall, there is no limit to the rise and fall of options, the volatility of options is far greater than **, and more than ten percent of intraday fluctuations are commonplace, sometimes as high as tens of percent, or even more than 100 percent, so for risk-oriented investors, options should be a good choice.
Fourth, the cost is lower and more flexible
Options can enter the market at a smaller cost, while ** require full cash reserves. Moreover, in the financial market, the ** market implements a T+1 trading system, once there is a major risk event after **, it can only be closed the next day, while options are different, 50ETF options implement a T+0 trading system, and you can open and close positions at will during the trading period, that is, you can buy and sell at will.
For example: a**100 yuan per share, 10,000 yuan can only buy 100 shares, even if the stock price doubles, you can only earn 10,000 yuan. But if you spend 10,000 yuan on a call option, for example, after a month, according to the right of 100 yuan per share of **2,000 shares of A**, assuming that the stock price rises to 200 yuan after 1 month, you just need to spend 200,000 yuan to buy 2,000 shares and then sell them immediatelyEarn200,000！Equivalent to 20x leverage. However, if the stock price falls to 80 yuan after 1 month, you can also choose to give up your rights, which is nothing more than a loss of 10,000 yuan in option premium.
In the same way, if you think that A**will**, you can also spend 10,000 yuan **A** put option, for example, a month later, the right to sell 2,000 shares of A** at 100 yuan per share, assuming that the stock price falls to 50 yuan after a month, you only need to spend 100,000 yuan **2,000 shares quickly, and then sell it at ** of 100 yuan per shareEarn100 thousand
If the stock price rises to 120 yuan after 1 month, you can also choose to give up the right, and the same loss is only the option premium of 10,000 yuan.
From the above examples, it can be seen that through options, you can kill two birds with one stone: one is to lock in the profit and risk of stock price fluctuations, there is no upper limit on profits, but the loss is capped at the option premium. The second is to increase leverage, spending 100 shares to play the game of 200 shares.
There are two sides to everything:Unless the implied volatility of the underlying stock increases suddenly, it is almost necessary to judge the direction accurately to make moneyAnd in many cases, even if the direction is correct, but the stock price does not change enough, you will still lose money. Conversely, selling options to make a profit does not necessarily require accurate direction. For example, selling an out-of-the-money put option means that the trader is bullish (bullish) on the underlying asset, but even if the underlying asset falls, as long as it does not fall below the strike price, the seller of the option still makes money, or even earns 100% of the premium.
Of course, the options market is generally fair, and every risk is worth the price. This is true for both the buyer and the seller. In fact, there is no such thing as a better seller or a buyer, only the question of which direction of the position is more in line with the risk-reward expectation for each trader.
What are the options trading rules and fees?
1.The contract types are call options and put options, which are often referred to as call options and put options.
2.The contract unit is 10,000 lots.
3.Expiration Month: The contract expires in the current month, the following month and the next two quarter months, for a total of four months. If it is October, the current contract expiration months are October, November, December and March of the following year.
4.Last trading day and exercise date: the fourth Wednesday of the month in which the contract expires (postponed accordingly on statutory holidays).
5.Exercise method: Exercise on the expiration date (European style).
6.Trading mode: T+0, you can trade and buy at any time.
7.Trading hours: 9:15 to 9:25 on each trading day;9:30 to 11:30;13:00 to 15:00;Among them, 9:15 to 9:25 is the time of the opening call auction, 14:57 to 15:00 is the time of ** bidding, and the other time periods are continuous auction time.
8.Minimum** unit: 00001 yuan.
9.The handling fee for an option is 2 yuan, and the trading side is 4 yuan, that is, the two-way charge for opening and closing a position is the same as that of a broker. It is now possible to reduce the cost of stock index options and fees（1.7 yuan sheets).