Options, like futures, are a type of contract. The option buyer has the right to purchase or sell an asset at a fixed price on a specific date or at any time before that date after paying a certain consideration to the seller. So are options a T+0 transaction?

Are options a T+0 transaction?

Options are T+0 transactions, that is, they can be bought and sold at any time on the same day. The trading limit for ordinary investors in one trading day is 1,000 lots. Options on the market can be bought up or down, and you can withdraw after the loss is deducted from the premium. On-market option trading is generally 30-50 times leveraged, and profits can be achieved regardless of whether it goes up or down.

Risks of options:

1. Price fluctuations

Because options are a relatively complex financial derivative, they are easily affected by many factors, and sometimes There will be large price fluctuations, which may result in losses for both buyers and sellers of options. Therefore, it is recommended that investors set a stop-loss price before buying options, and sell appropriately when the price drops to the stop-loss price.

2. Market liquidity

Options include calls and puts, with a large number of contracts. It is not ruled out that there are inactive transactions and poor liquidity. If investors choose to trade with poor liquidity, the transaction price may not be ideal. Therefore, investors need to pay attention to the liquidity of options when trading and choose more active contracts. Generally, the liquidity of the front-month contract is better than that of the far-month contract, and the larger the open interest, the better the liquidity.

3. Operational risk

For example, if investors make system errors or human errors during their operations.

4. Option exercise and settlement

Refers to the risk of exercise failure and default risk that investors may face. For example, if the option owner does not have sufficient funds or securities after excluding exercise, it will be judged as a failure to exercise the option and the relevant rights will not be granted. In addition, if the obligated party of the option fails to prepare sufficient funds or securities settlement on the expiration date, it will be judged as a breach of contract and may face penalties.

5. Contract expiration

Options have a clear expiration date. Options after expiration are worthless, so investors need to pay attention to the expiration date of each option contract. Be prepared in advance to sell or exercise options.

6. Forced liquidation

It means that the option obligor is forced to sell because the margin is small and cannot be replenished within the specified time. Therefore, when investors receive a call notice on a contract account, they should pay the margin in full within the specified time, otherwise they may be forced to sell.

7. Value risk

Options have an expiration date. The closer to the expiration date, the smaller the value of the outer option will be, and it will return to zero after expiration. Therefore, when choosing, investors are advised not to choose external options that are closer to the expiration date. At the same time, when expiration is approaching, it is best for investors to do a good job in off-site management and set stop losses and take profits to prevent the value from returning to zero.