General definition In view of the increasing concern of the Hong Kong stock market and the increasing demand for related hedging instruments, the Hong Kong Futures Exchange launched the Hang Seng Index Futures Contract as early as May 1986 and the Hang Seng Index Option Contract as early as March 1993. The trading volume of Hang Seng Index futures reached the sixth place in the world. Stock index futures contracts are based on the Hang Seng Index and its four sub-indices: real estate, public utilities, finance and industry and commerce. The contract is divided into four months, namely the current month, the next month and the last two quarters. The month is April, so the contract is divided into April HSI, May HSI, June HSI and September HSI.
1. For futures contracts with Hang Seng Index as the trading variety, each point of Hang Seng Index represents HK$ 50. Both parties to the transaction shall settle according to the market index at the time of liquidation or contract expiration, and there is no physical delivery. A futures contract is a promise between the buyer and the seller. People who buy and sell contracts must buy and sell stocks, indexes and other related assets at a predetermined price on a specified date in the future. No matter how the price of linked assets changes in the future, investors must fulfill their responsibilities in futures contracts. The Hang Seng Index futures contract is a kind of derivative, which allows investors to hedge the risk of falling stocks by holding "short positions", that is, selling contracts. In addition, investors can also make targeted investments by holding the "long position" of the futures index, that is, buying contracts, in anticipation of the stock market rise.
2. The purpose of using futures to hedge risks is to reduce the risks caused by price fluctuations in the relevant spot market. Suppose investors hold a basket of Hang Seng Index stocks. If he sells an appropriate amount of futures index in the futures market, once the stock price falls, his stock in the spot market will lose money, but because he sells futures, the profit in the futures market can make up for the loss in the spot market. Losses in the stock market.
3. Senior and ordinary investors with major functions can also invest in 33 index stocks by buying and selling Hang Seng Index futures and options contracts. As both local and international investors use the Hang Seng Index as an indicator to measure the performance of Hong Kong's stock market and portfolio, investors have been using Hang Seng Index futures and options contracts for trading and risk management. Cost-effective Hang Seng Index futures and options contracts can provide more cost-effective investment opportunities. Investors only need to pay a deposit when buying and selling Hang Seng Index futures and options contracts, and the deposit only accounts for a part of the contract face value, which makes hedging activities more cost-effective.
4. Low transaction cost. Each Hang Seng Index futures option contract is equivalent to a basket of high-value stocks, and each transaction only charges a commission, so the transaction cost is lower than buying and selling constituent stocks. The performance guarantee of the clearing company is the same as other futures and options contracts traded on the futures exchange. The Hang Seng Index futures and options contracts are now settled by the Hong Kong Futures Clearing House Limited, which is wholly owned by the Registry of the Futures Exchange and is responsible for settlement and performance guarantee. As the clearing company is the counterparty of all open contracts, there is no counterparty risk among clearing house participants.