What are the options trading rules? I believe this is what many friends want to know, because for options trading, it is very important to understand the trading rules, which can directly affect the buying and selling of options. Follow below Let’s learn about it slowly together.
Classification of options
According to different execution times, options can be divided into two main types: European options and American options. European options refer to options that are only allowed to be executed on the expiration date of the contract. They are used in most over-the-counter transactions. American options refer to options that can be executed on any day during the validity period after their establishment. They are mostly used on exchanges. No matter what kind of option it is, there are uniform options trading rules.
1. The impact of options trading rules
Options trading rules are bound to the underlying futures products, and all futures products have a settlement date. If the futures contract no longer exists, then obviously the options on that contract no longer exist either. Options Trading Rules Let’s talk about quantification and high-frequency trading in the WTI crude oil market and their impact on the technical aspects of the WTI crude oil market and options trading rules.
2. What are the rules of option trading?
The rules of option trading are: high-frequency and quantitative trading occur every day. Options trading rules may occur in the market at any time, and options trading rules are most concentrated in two time periods: First, around 9:00 a.m. New York time every day. Second: Every Wednesday at 10:30 a.m. New York time, after the U.S. Energy Administration (EIA) releases weekly crude oil inventory data.
3. Characteristics of option trading rules
From the perspective of product characteristics, options are not short-selling tools and will not have a direct reaction on the spot price. There are futures products based on individual stocks and ETFs overseas. Options trading rules are the future prices of securities, and futures prices directly reflect expectations for future security prices. But when the market is bearish about the future, futures prices will fall, which will have a direct reaction on the current spot price. However, options trading rules are different from futures and will not have a direct impact on spot prices. Options trading rules: On the one hand, options are non-linear products similar to insurance (retaining profits and transferring risks). The trading object of options trading rules is premium. The premium is affected by various factors such as volatility and interest rate, and its price differs from the spot price. It is huge, and the direction of change may be inconsistent. Therefore, market fluctuations in premiums are difficult to have an impact on spot price trends; on the other hand, option trading rules have many option contracts, and generally there are dozens or even hundreds of options for one option. Contracts, the transaction prices of different contracts are different, and from overseas practice, the transaction price changes of option contracts of the same type (such as call options or put options) with different exercise prices are not completely consistent. Therefore, the option price is difficult to influence Investors' expectations of spot prices.
IV. What are the options trading rules?
From the perspective of the motivations and expectations of stock option buyers and sellers, options are not short-selling tools. On the contrary, the demand for long-selling is stronger. Judging from the operating behaviors of buyers and sellers of call and put options, options trading rules can be roughly divided into eight situations. Among them, three situations have a positive impact on the spot market, four situations have basically no impact, and only one situation has an impact on the spot market. Minor adverse effects. Option trading rules Generally speaking, the multi-function of stock options is relatively obvious. This is also an important reason why the corresponding underlying securities generally rose after the launch of stock options in overseas markets.
Option trading rules In the global options market, option delivery methods are divided into two categories: cash delivery and physical delivery. Cash delivery of options, as the name suggests, refers to options contracts that have expired and have not been closed. Options trading rules use cash payment to complete the contract, and use the delivery settlement price to calculate delivery profits and losses.
Summary: The above is an introduction to options trading rules. The options trading rules are based on the centralized bidding trading system, supplemented by the market maker system. Market makers provide response quotes and bilateral quotes to avoid risk-free arbitrage.