today, let's talk about how to make a profit by shorting A shares. The so-called short selling is an investment term and an operation mode of the stock and futures markets. In the securities market, besides earning dividends and spreads, every downward adjustment of the market is also an opportunity to make money. Generally speaking, there are three ways to short A shares:
Short A shares in stock index futures
Futures are future goods, such as crude oil futures, which refer to future crude oil contracts. For example, A has agreed with an oil field that the crude oil to be mined after 3 months will be bought by A at a certain price, and one tenth of the deposit will be paid in advance, and then A will pay off the remaining money when the crude oil is transported to A's oil tank. At this time, the oilfield owner who exploited crude oil is the seller of the futures contract, and A is the buyer of the futures contract. The deposit of this transaction is the deposit, and finally the crude oil reaches the A tank, which is the delivery.
In reality, there will be many troubles. For example, the quality of crude oil has a great influence on the price, and the definition of crude oil quality is a difficult problem. There is also the payment of accounts receivable after the deposit; And what if the oil field is in disaster and cannot be delivered? And so on. In order to avoid these problems, crude oil trading is moved to the exchange, and standardized contracts are traded. The exchange handles these problems and acts as a trusted third party. This is how futures work.
because futures contracts can be directly transferred to others without waiting for delivery, and oil field owners are not picky about who to deliver them to at last, so it is convenient for speculators, who only need one tenth of the money to speculate on the price of crude oil. Speculators can not only act as buyers, but also directly act as sellers of contracts without exploiting any crude oil. If the price really falls, they will buy the same futures contracts to close their positions, so that they can close their positions without exploiting any crude oil. If the price of crude oil is not as good as expected, but rises instead, there is no need to worry about handing over the physical goods of crude oil. Similarly, if the contract is closed, the cash will be damaged.
the principle of stock index futures contracts is the same, the only difference is that the underlying assets here are not crude oil, but a lot of stocks. The subject matter of the IF futures contract is 3 stocks, and their composition is determined by the Shanghai and Shenzhen 3 Index. The subject matter of the IH and IC stock index futures contracts is 5 stocks in the SSE 5 Index and 5 Index. The meaning of stock index futures is a pile of stocks in the future.
The biggest feature of stock index futures is that it can be traded at T+, and there is no limit on the number of times on the same day. Assuming that investors think that the stock market will fall on that day, they can make profits in the falling market by selling stock index futures contracts (a bit like the above-mentioned securities lending).
Another feature of stock index futures is that it can be leveraged, which can amplify profits when investors make correct trading behaviors. Considering that futures companies generally require a margin ratio of 15%, this means that the leverage ratio is close to 7 times.
option shorting A shares
option, also known as option, is a derivative financial instrument generated on the basis of futures, which refers to the right to buy and sell in a certain period of time in the future. It is the right of the buyer to buy or sell a certain number of specific subject matter at a predetermined price in a certain period of time or on a certain date in the future, but it is not obliged to buy or sell.
options trading represents two concepts: first, stocks are valuable, and although the stock price movement is random, the amplitude and probability can be analyzed through the information provided by the market itself; Second, the stock price includes both the intrinsic value of assets and the risk of carrying assets. Value and risk can be traded separately.
specifically, because investors are inevitably divided in their views, there are bulls and bears, so options can be formally divided into call options (bullish) and put options (bearish). If we take Xiaomi as an example, let's assume that there are two situations:
In case one, if investor A thinks that Xiaomi will rise to a catty in 6 yuan after one month, and investor B who holds Xiaomi thinks that it is not worth so much money at that time. Therefore, they reached an agreement that A paid .5 yuan's down payment to B, and in the future, they had the right to buy millet held by B at the price of one catty in 5 yuan. In this way, both of them have a call option about Xiaomi.
in case 2, if investor a thinks that millet will drop to a kilo in 4 yuan after one month, and investor b thinks that millet will rise to a kilo in 5 yuan. So they also reached an agreement: A will sell Xiaomi to B at the price of 4.5 yuan one month later. For A, that means buying a put option. Put, that is, put.
the seller of the call option in case 1 and the buyer of the put option in case 2 are all short-selling investments. However, what can be used to make short profits is mainly to buy put options, which is the second case above. Suppose a month millet really only 4 yuan a catty. A can still sell Xiaomi to B at the price of 4.5 yuan Jin. Converting millet into stocks and putting options can help investors make profits in the falling market.
Take the SSE 5ETF option as an example. On February 6th, the latest price of SSE 5ETF was 2.3 yuan, but investors were optimistic about the market outlook and thought that SSE 5ETF would rise to 2.5 yuan one month later, so they bought a call option to exercise one month later at the market price of .6 yuan, with the exercise price of 2.3 yuan. If the SSE 5ETF rises to 2.5 yuan as expected one month later, the investor will earn .14 yuan (2.5-2.3-.6). On the contrary, when investors need to trade short, or when investors hold spot stocks and want to avoid the downside risks of stock prices, they can buy put options.
short a shares by securities lending
securities lending is a kind of credit transaction, that is, investors borrow securities from brokers to sell them with funds or securities as collateral, buy the same number and variety of securities within the agreed time limit and return them to brokers and pay the corresponding securities lending fees. How to operate specifically?
For example, since last year, the merger of China South Locomotive and North Locomotive into China CRRC has caused the stock price to soar, which made it once known as the "China God Car". If some investors think that the stock's valuation has been seriously overestimated due to the skyrocketing in recent days, they think that it will fall in the future. At this point, investors can borrow the shares from their brokers at the current share price and sell them. Assuming that the share price was 1, shares in 3 yuan at that time, the investor got 3, yuan in cash.
if the subsequent market of the stock is completely consistent with the investor's forecast, it has indeed plunged. At this point, the investor can buy back the 1, shares. If the price at the time of buying back is 2 yuan, the investor will spend 2, yuan (regardless of the guarantee fee and transaction fee). Therefore, during this period, the investor not only paid off the 1, shares he owed, but also earned 1, yuan.
unlike ordinary transactions, securities lending requires less margin. Specifically, investors engaged in ordinary securities trading must submit 1% margin, that is, they must deposit sufficient funds in advance to buy securities and hold sufficient securities in advance to sell securities. However, it is different to engage in margin trading. Investors only need to pay a certain margin to buy and sell a certain multiple of the margin, which greatly magnifies the profit. Of course, investment risks also increase. Assume that the integrated bonds did not fall as expected, but rose sharply and the losses were very heavy.
Is foreign capital the chief culprit in shorting A shares
Although foreign capital once sang short A shares, it is very difficult for foreign capital to short A shares under the existing mechanism. Under the existing domestic financial system, international capital can participate in the investment in the A-share market through QFII (Qualified Foreign Institutional Investor), RQFII (RMB Qualified Foreign Institutional Investor), Shanghai-Hong Kong Stock Connect and A-share ETF issued in the local market. In terms of the three methods mentioned above, it is difficult for foreign capital to short on a large scale.
first of all, it is extremely difficult to short foreign securities lending, because China has made strict regulations on securities lending. At present, China Securities Finance Co., Ltd. provides refinancing services for the two businesses of securities firms. According to the regulations of CSRC, the balance of each kind of securities financed by a securities company shall not exceed 1% of the negotiable market value of the securities. In view of the fact that the restricted shares may be released and sold by securities lending in disguised form, the relevant regulations are also limited. For example, the restricted shares held by "Sizhao" after the lifting of the ban will be used as the source of securities lending in the refinancing business under legal compliance conditions, but the shares that are still in the restricted period cannot be the source of securities lending. Therefore, the sources of short-selling securities are actually very few, and this method is unsustainable when there are no securities in the market.
Secondly, exchange-traded funds (ETFs) or derivatives listed outside China for China are another option for international capital to short A shares, but it is not difficult for foreign capital to short A shares on a large scale. At present, there are not many tools for the options launched by A-shares, only the A5ETF options on Shanghai Stock Exchange, and individual stock options are still in the testing stage. CHAD, newly launched by Direxion Investments on June 17th, is the first reverse ETF directly targeting the A-share Shanghai and Shenzhen 3 Index, and its asset scale is still very small. Previously, Proshares, the largest reverse leverage ETF fund company in the United States, launched two short ETFs tracking the FTSE China 5 Index, with a scale of only $5 million and $8 million.
The most famous stock index futures are FTSE China A5 futures traded on the Singapore Stock Exchange. In January and April of this year, the FTSE China A5 Index (including the 5 companies with the largest market capitalization in China A-share market, with a total market capitalization accounting for 33% of the total market capitalization of A-shares) used the news that the regulatory authorities regulated the two financial services to short the China stock market several times.
However, the above financial derivatives cannot short specific stocks or sectors. Moreover, the China Securities Regulatory Commission has a strict review of QFII or RQFII qualifications of these short ETFs. According to the latest data released by the State Administration of Foreign Exchange on June 3th, in June, the foreign exchange bureau issued new investment quotas of QFII and RQFII of 3.331 billion US dollars and 1 billion RMB respectively. As of June 29th, the total amount of QFII increased to 75.542 billion US dollars, and the total amount of RQFII reached 39.9 billion yuan. Therefore, it can be seen that it is difficult for foreign investors to short, and this road is unlikely to cause the China stock market to plummet.
The promoter of A-share plunge
As mentioned earlier, the restrictions on short selling of securities and options (whether domestic or foreign) are relatively large, and stock index futures have become the best choice for shorting A-shares. On the other hand, China's short-selling mechanism started late. In order to encourage short-selling, the regulatory authorities adopted a relatively preferential policy for stock index futures, but it was these conveniences that buried hidden dangers and caused this stampede.
For example, the rules of China's stock market and stock index futures market are out of sync. The stock market implements T+1, but the futures index implements T+. The futures index makes money by shorting, and it can continue to short again on the same day, which leads to a vicious circle.
By the way, there is a rumor that the stock market has fallen recently. Many conspiracy theorists think that some people have proposed "prohibiting naked short selling" in the futures index and even in the rescue proposal of some institutions. This is a complete misunderstanding of the trading mechanism of stock index futures.
naked short selling is the concept of stock spot market. According to whether the sale is unprecedented or not, short selling can be divided into short selling by short selling and naked short selling. Among them, short selling by securities lending or covered short selling means that investors have signed a securities borrowing agreement before selling securities; If it is not incorporated into securities in advance, it is naked short selling. Although T+1 settlement is implemented in China's A-share market, no institution or individual is allowed to sell stocks that are not held in the account, so there is no naked short selling in the spot market.
Stock index futures are even more irrelevant to naked short selling. First, futures trading is different from spot trading. In futures trading, the sum of selling futures contracts and buying futures contracts is constant, which offsets each other. There is no situation that there are more short contracts than long contracts, and short contracts cannot unilaterally create new contracts. Second, futures trading is margin trading, and only by paying enough margin can you open a position; Once the deposit is insufficient, it must be fully recovered. In addition, Article 63 of the Trading Rules of China Financial Futures Exchange also stipulates that when the market risk increases obviously, the exchange may also raise the trading margin standard. Third, the stock index futures contract was reached immediately after the on-site matching, and there was no delay in delivery. Neither party could profit from the time difference of delivery. Therefore, there is no naked short selling in stock index futures.
At present, China Financial Futures Exchange offers three kinds of futures trading, namely, Shanghai and Shenzhen 3 stock index futures, Shanghai and Shenzhen 5 stock index futures and CSI 5 stock index futures. Generally, the short seller shorted the CSI 5 stock index futures contract (IC157), which directly caused the CSI 5 constituent stocks to fall, which led to the forced liquidation of off-exchange financing and on-exchange financing, and Public Offering of Fund was also redeemed. Because of the limit of the daily limit, the stocks that fell first could not be sold, but only the stocks that had not yet fallen, which triggered a large-scale decline in the A-share market. From the disk analysis, every decline starts from the futures index, and the decline of the stock market follows the futures index closely, so shorting stock index futures may be the booster of this round of stock market crash.
why choose C157? Because its market size is the smallest, it is the easiest to exert its strength. Through the index linkage effect, it is easy to form a market panic effect and drive other indexes down, which has the effect of four or two. Moreover, the main contract of CSI 5 futures index comprehensively reflects the overall situation of small-cap companies, which can best reflect the essence of the market and is representative of the market.