How to distinguish and understand what is an option obligation position and an equity position? Option is a kind of financial derivative that allows you to sell assets at a specific rate in the future, so how to distinguish between an obligation position and an equity position? Today we're going to talk about that! Option **: Caishun Option
1. What is the difference between option rights and obligations? In options trading, participants can be divided into two roles: option obligation position and option right position, and these two bear different responsibilities and rights
1. The right position refers to the option buyer's **, in fact, the right position is the contract of the investor, which can give you the right to sell the contract according to the agreement, and at the same time you can also give up this right not to execute.
2. The obligation position refers to the option seller's **, and the obligation position refers to the income obtained from the options sold by investment friends, and it also needs to bear the corresponding obligations that must be borne according to the agreement.
Note: In some trading venues, holders of option obligation positions are required to pay a certain margin to ensure that they can fulfill their obligations; Holders of option positions do not need to post margin. Option Obligation or Power Position? In fact, the choice of option obligation position or power position depends on personal investment objectives, risk appetite and market judgment, let's take a look at the advantages and disadvantages of both.
2. What are the advantages and disadvantages of option rights positions?
Theoretically, there is a limited loss and unlimited gain, that is, when the ** is unfavorable, the buyer's biggest loss is the limited premium loss, because the contract cannot fall into a negative number. And when the best is good, the biggest benefit of the buyer's friend is unlimited. The disadvantage of the right position is that the winning rate is relatively low. Because options have time value, and the time value is constantly decaying, the value of the option premium held by the right position, as the party holding the right position, will decrease step by step with time if the underlying asset does not fluctuate.
3. What are the advantages and disadvantages of option obligation positions?
In the options trading market, the obligation position is the right position of the top, the biggest feature is "limited income and unlimited risk", the maximum profit of the obligation position is equal to the loss of the right position, and the maximum loss of the obligation position is infinite, which corresponds to the buyer's unlimited **, about the obligation position, the premium obtained after selling the option is its maximum income, and then if it is unfavorable, the income will be eroded step by step, if it has been unfavorable, then its loss will continue to expand.
Finally, the above views are for reference only, not as a basis for trading, and profits and losses are at your own risk. The market is risky, and investors need to be cautious.