Automatic practice
The automatic exercise rule is that if the exercise profit is greater than the minimum profit, the exercise will be automatically carried out, and the seller and the investor will passively perform the contract; If the exercise profit is lower than the minimum profit, the exercise is not allowed.
When the option position expires, the buyer can exercise his rights, and then the seller of the option must perform it. The Exchange will exercise options on buyers who meet one of the following conditions.
First, if the buyer submits the minimum profit amount of exercise, the exercise condition is that the actual value of the contract is greater than the minimum profit amount of exercise submitted by the buyer and the exercise (performance) fee stipulated by the exchange; Second, if the buyer fails to submit the minimum profit amount of the exercise, the exercise condition is that the actual value of the contract is greater than the exercise (performance) fee stipulated by the exchange.
When the buyer's position that does not meet the above two points expires, it is regarded as giving up the exercise. Option buyers can submit the minimum profit amount of exercise to the exchange on the expiration date of 9:30- 15: 15.
Among them, the actual value of the option contract is the settlement price of the last trading day multiplied by the contract multiplier. Profit and loss of stock index option contract exercise = ∑ (settlement price of last trading day × exercise quantity of call option contract × contract multiplier)+∑ (settlement price of last trading day × exercise quantity of put option contract × contract multiplier)-∑ (settlement price of last trading day × exercise quantity of put option contract × contract multiplier)
The cash delivery on the maturity date of the Shanghai and Shenzhen 300 stock index options adopts the automatic exercise method. When it expires, investors do not need to submit an exercise application, and the qualified option contract exchange will exercise automatically. The automatic exercise mode simplifies the operation process of investors, and investors do not need to worry about the losses caused by forgetting or making mistakes in exercise, thus reducing the operational risk in the delivery process.
Rules and advantages of cash delivery
When the option contract is exercised, the exchange will make cash delivery according to the settlement price of the last trading day and settle the corresponding position. According to the settlement price of delivery, the exchange determines the settlement price of stock index options on the last trading day and pays the profits and losses of buyers and sellers. The settlement price of stock index options is the arithmetic average price of the last two hours of the underlying index on the last trading day. For example, the settlement price of IO2006-C-4050 contract on the last trading day = contract delivery settlement price-contract exercise price =4094.62-4050=44.62, and the option profit of this contract = trading day settlement price × contract multiplier =44.62× 100=4462 yuan.
The cash delivery method is simple and fast, and the buyers and sellers of options do not need to prepare the constituent stocks of the underlying index, so long as the account funds are sufficient at the time of delivery, the delivery can be successfully completed.
Stock index options are delivered in cash, which has the advantages of quickness, convenience and low delivery risk, and contributes to the stability of the underlying stock market. First of all, cash delivery only involves the transfer of funds, which is more convenient to operate, takes less time to complete delivery and has lower delivery risk. For example, the Shanghai and Shenzhen 300 stock index options can be delivered on the same day, without overnight risk and capital cost. Secondly, cash delivery can effectively avoid the risk of pin. Cash delivery will not lead to the delivery of constituent stocks, so the option seller does not need to worry about the risk of unilateral position, because it can not accurately predict the number of exercise of the buyer, and thus can not accurately hedge. Finally, cash delivery contributes to the stability of the basic stock market. As American regulators considered in 198 1, cash delivery makes it unnecessary for buyers and sellers of stock index options to buy constituent stocks for delivery near delivery, which reduces the impact of delivery on stock market supply and demand and is conducive to the stability of the underlying stock market.