When buying a call option, the buyer pays a certain amount of royalties to the seller to obtain the right to buy the subject matter at the exercise price at some future time. When the price of the subject matter rises, the option buyer can exercise or close the position and get the benefit of the price increase. When investors expect the base price to rise, they can buy call options. The purpose of buying call options instead of the subject matter is to avoid expanding losses due to falling prices. At the same time, get more benefits with less money when prices rise.

Second, the income statement

For the call option buyer, theoretically, when the market price rises, the potential profit is infinite; When the market price falls, the risk is limited, and the biggest loss is the patent fee paid. The breakeven point when the option expires is equal to the exercise price plus the premium paid by the buyer when buying the option (excluding transaction costs), that is, breakeven point = exercise price+premium paid.

When the option expires, the more the market price is higher than the breakeven point, the more profits the option buyer will make.

Case study: Investors buy PTA call options with an exercise price of 5300 yuan/ton and pay a premium of 90 yuan/ton. At maturity, the underlying futures price rose to 5700 yuan/ton.

Exercise profit = futures price-exercise price =5700 yuan/ton -5300 yuan/ton =400 yuan/ton net profit (loss) = exercise profit-royalties =400 yuan/ton -90 yuan/ton =3 10 yuan/ton breakeven point: 5300 yuan/ton +90 yuan/ton = 5399. Below 5390 yuan/ton, the call option is lost. If you buy PTA call option, the exercise price is 5300 yuan/ton, and the profit and loss of the option are as follows:

Third, timing and methods.

①? merits and demerits

Advantages: Theoretically, the potential profit is infinite and the risk is limited. But limited risk does not mean less risk. Disadvantages: Because the option is a "waste of assets", the value of the option will gradually decline with the passage of time, and the buyer of the call option will lose part of the "time value". According to the survey data of Chicago Mercantile Exchange, "the probability of option expiration is about 75%", and there are relatively few profit opportunities for buying call options.

②? chance

Judging from the trading opportunity of foreign option investors, they generally choose to buy call options when the volatility or historical price is low. Expected market volatility returns. When the market volatility is low, the option price is cheaper and the cost of capital is lower. In addition, the market tends to fluctuate periodically, with low fluctuation in one stage and high fluctuation in the next. In this way, when the market volatility is low, it is easier to get income by buying call options. When the expected trend is reversed, extreme prices will appear. Other things being equal, when the price of the subject matter keeps falling to a historical low, the premium of the call option tends to keep falling, and when the price of the subject matter is the lowest, the premium of the option is the least. If the expected target price is reversed, buying a call option near the historical low can usually get a profit of 10%.

③? way

Choosing an option contract with better liquidity is conducive to reaching a transaction. Generally speaking, the liquidity of the subject matter is good, the market makers are mature, and the trading of flat, shallow real and shallow imaginary option contracts is active. Select the option with appropriate maturity. The longer the expiration time, the higher the option value and the higher the premium cost; The shorter the expiration time, the faster the loss of time value of options. Therefore, when buying a call option, you should choose an option contract with appropriate terms. The greater the expected increase in the price of the subject matter, the greater the imaginary value of the call option.