In the investor classification of SSE 50ETF options, bullish strategy is one of the strategies that primary investors can do, but this positioning does not mean that the risk of this strategy is very small. Investors who are familiar with the theory of option parity should understand that holding options long and shorting call options are actually equivalent to holding put options short, and the risk of shorting options is great, so many factors still need to be considered if we want to do this strategy well.
The first is the opportunity to enter the market. When running a covered bull strategy, it is best that the underlying assets have risen sharply in the near future and are expected to consolidate or rise slightly in the short term. Secondly, the implied volatility of the options sold should be in a relatively high position, so the probability of getting benefits from the decline in option volatility is greater. In addition, it is best to sell options in recent months or next month, which is more conducive to earning the time value of options. Finally, the option contract sold when the covered call strategy is implemented is usually a virtual option contract, that is, the exercise price of the option will be higher than the current price of the underlying asset. The advantage of this is that on the one hand, the probability of exercising is low, on the other hand, even if exercising, the price of the underlying assets sold at the time of exercising is higher than the current price of the underlying assets, and investors will also get certain income.
Before implementing the covered buying strategy, we should understand two kinds of risks that the covered buying strategy will face. The first category is that the decline of the underlying assets exceeds the premium obtained by selling call options, and the premium charged by selling options will not be enough to make up for the losses caused by the underlying assets. If the price of basic assets continues to fall, investors will also face increasing risks. The second category is that the underlying assets may rise sharply, resulting in the option being exercised, which makes the underlying assets have to be sold at the exercise price, locking in the maximum profit and unable to obtain greater benefits from the rise of the underlying assets. At this time, although investors will not lose money, the income from relatively simply holding the underlying bulls will be reduced. This is why this strategy is implemented only when the fluctuation of the underlying assets is expected to be small in the short term.
Let's take the SSE 50ETF option as an example to analyze the covered buying strategy. The chart below shows the daily chart of SSE 50 ETF 20152-May. It can be seen that from the beginning of March to the end of April, there was a strong rise in SSE 50ETF. On April 22nd, the top 50ETF closed at 3.24 1 (as shown by the arrow on the left in the figure). If we hold the stock 100 with 50 ETFs and think that the market outlook may consolidate for some time, we will sell a call (call) option with an exercise price of 3.4 in May, with a return premium of 1260 yuan, and the expiration date of the option is May 27th. After selling the call option, the holding cost of our SSE 50ETF decreased to 3.241-0.126 = 3.115 (RMB).
Suppose we hold short-term options and expire. On the option expiration date, the closing price of SSE 50ETF is 3.285, which is lower than the exercise price of 3.4, so we can earn all the royalties of 1.260 yuan, and our SSE 50ETF also has some gains. From the results, everything is perfect, but in fact, the risks can not be ignored. As can be seen from the above figure, before the option expired, the SSE 50ETF dropped significantly, and the lowest price reached 2.94. At this point, the overall position is at a loss relative to the opening of the option. In the case that the SSE 50ETF has fallen a lot, you can also consider closing the short position of call options. Because the value of the call option is almost negligible at this time, continuing to hold it will not generate much income. Considering the risk-return ratio, it may be a better choice to close the call option at this time.