[Contract Type and Target]
The biggest difference between soybean meal, sugar and copper options is that the option type of copper option adopts European option, while soybean meal and sugar adopt American option. There is no absolute difference between European options and American options. Relatively speaking, the uncertainty of European option management risk is small, which meets the needs of copper enterprises. For the seller, there is no need to consider the performance risk of the option being exercised at any time.
The subject matter of soybean meal, sugar and copper options are all corresponding futures contracts. The contract types are call and put options, and the contract unit is the same as futures. Soybean meal, sugar 1 hand 10 ton, copper 1 hand 5 ton. Therefore, when investors see that the price of a copper option is 1000 yuan/ton, they need to multiply it by 5600 yuan.
As for the month of the option contract, because copper futures is a continuous contract, there is a corresponding option contract every month. In order to avoid the problem of insufficient liquidity in recent months in the initial stage of listing of new varieties, the contract months of copper options listed in the previous period started from 20 19 1 and ended on 2019 September, which decreased by 20 18 10.
In addition, it should be noted that from 2065438 to March 2008, Zhengshang Institute revised the month and the last trading day of the white sugar option contract. After revision, the sugar option contract was revised from 65438+ 10 month, March, May, July, September, 165438+ 10 month to the underlying futures contract for two consecutive months, and the subsequent months were listed on the second trading day after the settlement of the underlying futures contract reached 5000 lots (bilateral). Zheng Shang Institute has also revised the provisions of the last trading day in the sugar option contract. Considering the moving time of sugar futures, the final expiration date of the original option is changed from the penultimate trading day of the two months before the delivery month of the underlying futures contract and other dates stipulated by the exchange to the third trading day before the delivery month of the underlying futures contract and other dates stipulated by the exchange 1 month.
The table shows the comparison of option contract types.
[option contracts Design]
Exercise price range and listing contract
The design of option exercise price range directly affects the activity of option trading. If the distance between the exercise prices is too large, it is not conducive to investors to find a suitable option contract for hedging, which reduces the hedging effect of the underlying futures contract and cannot meet the market demand; If the distance between exercise prices is too small, it will lead to the dispersion of trading volume and positions, which is not conducive to the active trading.
There are five main ways to design the exercise price and exercise price range of foreign exchange options:
First, the exercise price range is fixed, and each option variety generates each exercise price according to this exercise price range.
Secondly, the distance between exercise prices is determined according to the level of exercise prices. The distance between lower exercise prices is smaller, while the distance between higher exercise prices is larger.
Third, the price gap between the option contract of the underlying futures in normal months and the series of option contracts and cycle rights is different.
Fourthly, determine the exercise price range according to the distance of the expiration month. The distance between distant contracts is large, and the distance between recent contracts is small.
Fifth, the exercise price range is determined according to the distance from the flat option. The exercise price range of options with deep real value and deep imaginary value is wider than that of options near the flat value, so as to reduce the number of exercise prices.
China mainly adopts the second method to determine the distance between exercise prices according to the level of exercise prices.
In addition, the listing methods of the above options are also different. The exercise price of soybean meal and copper options is based on the price limit of futures, while the sugar option directly adds a flat option and several real imaginary options.
The table below shows the comparison of exercise distance of options.
Trading time and trading instructions
Option trading time is the same as the subject matter trading time. Different options have different trading instructions. At present, there are no market orders for soybean meal options and copper options, there are market orders and arbitrage orders for white sugar options, and arbitrage orders for buying and selling cross-selling or long-span strategies. Option arbitrage orders must be accompanied by instruction attributes, including the automatic cancellation of the remaining orders for immediate trading or the automatic cancellation of all transactions immediately.
The table shows the comparison of option trading time and trading order.
Risk system
The price limit of the option contract is the same as that of the futures contract, but the fluctuation of the price limit will be more intense because of the small price base of the option. Assuming that the futures price of copper 190 1 contract is 50,000 yuan/ton, the fluctuation range is 2,500 yuan/ton based on the price limit of 5%, and the average price of option contract this month is 1500 yuan/ton, then the intraday fluctuation range of this contract is1-4,000 yuan/ton.
For the margin, it can be understood that the seller pays different margins according to the depth of the option. The deeper the real value of the options sold, the more margin will be paid, while the deep imaginary options sold are half of the futures margin paid. Soybean meal and copper options have not yet launched a portfolio margin, but I believe that a portfolio margin system will be launched soon.
The following table shows the comparison of option risk systems.
This table is a summary of deposit collection in commodity options.
Exercise mode
In terms of exercise mode, since the copper option is a European option, the buyer can apply for exercise or abandon the application before the expiration date 15:30. If there is no exercise application, whether it is soybean meal, sugar or copper option, the exchange will automatically exercise the real option.
The table shows the comparison of motion patterns.
It should be noted here that the exchange will compare the exercise price with the settlement price of the futures contract of the day, and investors holding shallow real value options should decide whether to exercise according to the settlement price at maturity, exercise cost and other factors.
After exercising the right, the buyer will get the corresponding futures subject matter. If the multi-position buyer wants to own the spot, he needs to wait until the futures delivery.
[Market maker system]
In order to enhance market liquidity, reduce the bid-ask spread and reduce transaction costs. In order to find more real prices and improve the stability of prices, the above exchanges all adopt the market-making system. The so-called market maker is to provide liquidity for the market by providing bilateral quotations, make profits through bid-ask spreads, and get preferential treatment for exchange fees. The exchange implements the qualification management of market makers according to the options. To apply for market maker qualification, the following seven conditions need to be met:
First, financial requirements. Its net assets shall not be less than 50 million yuan.
Second, personnel requirements. There are specialized agencies and personnel responsible for market-making business, and market-making personnel should be familiar with the relevant laws and regulations on futures and options and the business rules of the exchange.
Third, the system requirements. It has a sound market-making business implementation plan, internal control system and risk management system.
Fourth, credibility requirements. No record of major violations of laws and regulations in the last three years.
Fifth, system requirements. It has a stable and reliable market-making business technology system.
Sixth, trading experience. Have market-making experience in option trading or option simulation trading recognized by the exchange.
Seventh, other conditions stipulated by the China Securities Regulatory Commission and the Exchange.
After meeting these requirements, submit relevant materials according to the requirements of the exchange. After obtaining the approval of the exchange, the applicant shall sign a market maker agreement with the exchange within 10 trading days from the date of receiving the notice from the exchange. After the signing of the agreement, the applicant officially becomes a market maker and has the qualification of a market maker for this option. According to the agreement and the performance of market-making obligations, market makers can enjoy the right to reduce transaction costs. At the same time, the following three obligations need to be fulfilled: first, the effective time ratio of continuous quotation should comply with the agreement; Two, the effective response to the quotation inquiry ratio should comply with the agreement; Third, other obligations stipulated in the agreement.
For market makers, there is also corresponding supervision and management. Market makers shall not use their market-making qualifications to engage in insider trading, market manipulation, fraud and other illegal acts, or seek other illegitimate interests. The exchange can evaluate the completion of market-making obligations of market makers and rank them by year, or according to needs. The exchange may publish the ranking of market makers. The exchange may implement the elimination or reward of the last place according to the completion of the obligations of market makers.
[Investor suitability assessment]
Similar to the suitability of soybean meal and sugar options, opening copper options requires funds, option knowledge, simulation experience and exercise records.
In terms of funds, the balance of available funds in the daily settlement margin account shall not be less than RMB 654.38+10,000 for five consecutive trading days before the authorization is opened. In terms of option knowledge, pass the knowledge test recognized by the exchange, with a score of 90. In terms of simulation experience, there are 20 or more options simulation transactions recognized by the Exchange for a total of 10 trading days. At the same time, it is also necessary to have the exercise record of option simulation trading. In addition, there must be a record of good faith, and there is no situation in which laws, administrative regulations, rules and business rules of the exchange prohibit or restrict futures and options trading. Individual investors can open an option account if they meet these conditions. On this basis, the general unit customer investors also need to have internal control, risk and other related systems to participate in option trading. For special customers, market makers and customers with real trading records of options in the past three years recognized by the exchange, options trading authority can be opened without proper evaluation.