1. What is an option?
An option is a financial derivative that gives the holder the right, but not the obligation, to purchase or purchase an asset at a specific date in the future or at any time before that date. This right may be exercised or waived, depending on the holder's expectation of changes in the underlying asset**. Therefore, an option can be considered as an option.
2. Why is there an option product and what is its function?
Options arise from investors' need for risk management. In the financial markets, investors are often exposed to the risk of volatility. As a financial instrument, options can provide investors with an effective risk management strategy. By purchasing options, investors gain a right, rather than an obligation, to protect their portfolio from adverse movements.
The role of options mainly includes the following aspects:
1.Risk Management: Options can provide investors with an insurance strategy to protect their portfolios from adverse movements. For example, if you buy a put option on the underlying asset, you can get the right to earn income while paying a certain premium.
2.Increased returns: By selling options, investors can earn premiums, increasing the returns of their portfolios.
3.Hedging: Options can be used to hedge to reduce the risk of fluctuations in the underlying asset**. For example, an investor who holds the underlying asset can sell a corresponding call option in order to earn a premium while reducing the cost of holding.
4.Speculative trading: Options can also be used for speculative trading, where the direction and magnitude of the underlying asset changes to earn income.
3. How to operate options.
The operation of options mainly includes two basic strategies: ** and selling.
1.Strategy: When an investor believes that the underlying asset will be, they can choose to call an option. At this time, the investor needs to pay a certain premium to obtain the right to earn income. If the underlying asset *** option value will be corresponding**, the investor can earn the difference and profit from it. If the underlying asset *** investor can choose to forfeit the exercise of the right, the loss is only the premium.
2.Sell strategy: When the investor believes that the underlying asset will be, he or she can choose to sell the put option. At this point, the investor will receive the income from earning the premium, but at the same time, it will also bear the obligation to earn the income. If the underlying asset *** sells the option, it will face a huge risk of loss. Therefore, you need to carefully assess your own risk tolerance when choosing a selling strategy.
Fourth, how to hedge options.
Option hedging refers to the use of the characteristics of options to offset or reduce the risk of the cash market. By selling or selling the corresponding option contract, investors can reduce or eliminate their risk exposure. Here's how:
1.Protective Put Options: When investors hold spot assets and are worried, they can put options accordingly to protect the value of their portfolios. If *** or ** is limited, the option will act as insurance; If *** is excessive, the option will provide additional income ** for the investor**.
2.Sell call options: When investors are concerned about the underlying asset***, they can sell call options to earn premium income. This allows you to reduce your risk exposure while earning income. However, it should be noted that if the market is too much, the risk of loss from selling call options will increase.
3.Build an arbitrage portfolio: By selling options contracts with different executions at the same time, investors can construct an arbitrage portfolio to obtain risk-free returns or reduce risk exposure. However, it should be noted that arbitrage operations require accurate calculation and risk management capabilities, otherwise they may face greater risks.
5. Requirements for opening options.
There are certain conditions and requirements that need to be met to open options trading. The details are as follows:
1.*The account has been open for at least 6 months and the average daily financial assets are not less than 500,000 yuan (excluding margin assets). In addition, the risk tolerance level of individual investors needs to be medium to high risk (C4 and above).