Exercise day, which is a crucial day for options traders. Today, we will give you a science about the exercise date and how it affects our option strategy.
First of all, the exercise date refers to the day on which the option contract is exercised. On this day, the option buyer can choose whether to exercise the rights conferred by the option contract to achieve the agreed execution*** or sell the underlying asset. The exercise date in the Chinese market is usually the third Friday of each month, but the specific date may be adjusted due to holidays and other factors.
So, how does the strike date affect our options strategy?
For the buyer, it is advantageous to exercise the option if the market of the underlying asset is higher than the strike before the exercise date. Conversely, if the market is lower than the strike, then the buyer may choose not to exercise the option, as exercising the option will result in a loss. Therefore, before the exercise date, the buyer needs to pay close attention to the market dynamics to decide whether to exercise the option.
For sellers, they need to prepare funds or ** in advance to prepare for possible closing. If the seller does not have sufficient funds or ** to make delivery, it may be at risk of default. Therefore, the seller needs to do a good job of risk management before the exercise date to ensure that it can meet its contractual obligations.
The exercise date also affects the liquidity of the options contract. The volume of options contracts typically increases before the exercise date, as traders need to adjust their positions before the exercise date. After the exercise date, some options contracts may lose liquidity due to expiration, which will also affect our trading strategy.
Finally, we would like to remind everyone that exercise date is an important time in options trading, and we need to prepare and manage risks in advance. At the same time, we also need to pay close attention to market dynamics and exchange announcements to deal with possible delivery risks and other uncertainties.