1. For real options, the execution price of the call contract will be lower than the market price of the underlying securities, while the execution price of the put contract will be higher than the market price.
2. For the call and put contracts of hypothetical options, the exercise price of buying is higher than the current market price, and it has no value in itself, mainly because of the fluctuation space of the underlying assets, which is affected by many factors.
For example, real options are equivalent to being able to make money and buy things. At that time, the market price was good, so you can close your position on the same day and make a profit, or exercise your rights at maturity to gain market value.
Virtual options, the value of which is easy to return to zero, were bought only when the market price was high.
Look at the picture below to distinguish real value, flat value and imaginary value.
Caishun finance
Who benefits more from the difference between real value and imaginary value?
When the market is abundant, the increment of virtual options will be greater than that of real options.
The main reason is that the premium of real options is higher than that of imaginary options, and the leverage is lower. For example, on February 25th, 20 19, SSE 50 rose by nearly 7%, and 50ETF options rose by 192 times that month. Visible, in the case of sufficient market, hypothetical options can also bring great benefits, with certain benefits.
I hope that the introduction of real options and virtual options will be helpful to everyone. Starting with the knowledge analysis before practical application, it is good for everyone to know more about options.