Options mainly include the following factors: ① exercise price (also called exercise price). The buying and selling price of the subject matter specified in advance when the buyer of the option exercises his rights. Royalties. Option price paid by the option buyer, that is, the fee paid by the buyer to the option seller for obtaining the option. ③ Performance bond. Option sellers must deposit performance bonds, ④ call options and put options on the exchange. Call option refers to the right to buy a certain number of subject matter at the execution price within the validity period of the option contract; Put option refers to the right to sell the subject matter. When the option buyer expects the target price to exceed the strike price, he will buy a call option, and vice versa.
According to the different execution time, options can be mainly divided into two types, European options and American options. European option refers to the option that can only be exercised on the expiration date of the contract, which is adopted in most OTC transactions. American option refers to any option that can be executed within the validity period after trading, which is mostly adopted by floor exchanges.
For example:
(1) call option: 65438+ 10/,the subject matter is copper futures, and the exercise price of the option is 1 850 USD/ton. A buys this right and pays $5; Sell this right and get 5 dollars. In February 1, copper futures price rose to 1905 USD/ton, and call option price rose to 55 USD. A can adopt two strategies:
Exercise-A has the right to buy copper futures from B at the price of 1.850 USD/ton; B after a puts forward the requirement of exercise option, it must be met. Even if Japan doesn't have copper, it can only buy it in the futures market at the market price of 1.905 USD/ton, and sell it to A at the exercise price of 1.850 USD/ton, while A can throw it into the futures currency market at the market price of 1.905 USD/ton, making a profit of 50 USD (1. B Loss of $50 (1850- 1905+5).
Put option-A can sell the call option at a price of $55, and A earns $50 (55-5).
If the copper price falls, that is, the copper futures market price is lower than the final price 1850 USD/ton, A will give up this right and only lose the patent fee of 5 USD, while B will make a net profit of 5 USD.
(2) Put option: In June 1 day, the strike price of copper futures is 1750 USD/ton. A buys this right and pays $5; Sell this right and get 5 dollars. In February 1, copper price fell to 1 695 USD/ton, and put option price rose to 55 USD. At this point, A can adopt two strategies:
Exercise 1 1 1A can buy copper from the market at the middle price of 1.695 USD/ton, and sell it to B at the price of 1.750 USD/ton. B must accept it, and A will make a profit of 50 USD (1.
Put option -A can sell the put option for $55. A makes a profit of $50 (55-5).
If the copper futures price rises, A will give up this right and lose $5, while B will get $5.
Through the above examples, we can draw the following conclusions: First, as the buyer of options (whether call options or put options), there are only rights but no obligations. His risk is limited (the biggest loss is royalties), but theoretically his profit is unlimited. Second, as a seller of options (whether call options or put options), he has only obligations but no rights. Theoretically, his risks are infinite, but his income is obviously limited (the biggest income is royalties). Third, the buyer of the option does not need to pay a deposit, but the seller must pay a deposit as a financial guarantee for fulfilling his obligations.
Option is an important hedging derivative tool to meet the needs of international financial institutions and enterprises to control risks and lock in costs. 1997 The Nobel Prize in Economics was awarded to the inventor of the option pricing formula (Black-Scholes formula), which also shows that international economists attach importance to option research.
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