Divide by rights
According to the rights of options, there are two kinds: call options and put options.
CallOptions means that the buyer of the option has the right to buy a certain number of specific commodities from the option seller at a pre-agreed price within the validity period of the option contract, but he is not obliged to buy them. The option seller is obliged to sell the specific commodities specified in option contracts at the price specified in advance at the request of the option buyer within the validity period specified in option contracts.
(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; After A puts forward the requirement of this exercise option, B must meet it. Even if B 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 sell it in the futures market at the market price of 1.905 USD/ton, making a profit of 50 USD/ton (654,300. B will lose $50/ton (1850- 1905+5).
Put right-A can sell a call option at a price of $55, and A earns $50/ton (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.
PutOptions: The option buyer has the right to sell a certain number of specific commodities specified in the option contract to the option seller at a pre-agreed price, but he is not obliged to sell these commodities. The option seller is obliged to purchase the specific commodities specified by option contracts at the price specified in advance at the request of the option buyer within the validity period specified by option contracts.
(2) Put option: 65438+ 10 month 1, the strike price of copper futures is 1750 USD/ton, and A buys this right and pays 5 USD; Sell this right and get 5 dollars. In February 1, copper price fell to 1695 USD/ton, and put option price rose to 55 USD/ton. At this point, A can adopt two strategies:
Exercise 1 1 1A can buy copper from the market at the middle price of 1695 USD/ton and sell it to b at the price of 1750 USD/ton. B must accept that A gains $50/ton (1750- 1695-5) and B loses $50/ton.
Put option -A can sell the put option for $55. A The profit is USD 50/ton (55-5).
If the copper futures price rises, A will give up this right and lose $5 in royalties, while B will gain $5 in net profit.
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 limited (the biggest income is royalties). Third, the buyer of the option does not need to pay a deposit, while the seller must pay a deposit as a financial guarantee for fulfilling the obligation.
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.
Bermuda option is an option that can be exercised for a series of time before the expiration date. The main difference among Bermuda option, American option and European option lies in the different exercise time. Bermuda option can be regarded as a mixture of American option and European option, just as Bermuda is a mixture of American culture and British culture.
Divided by delivery time
According to the delivery time of options, they are divided into American options and European options. American option means that you can exercise your rights at any time within the validity period stipulated by option contracts. European option refers to the right that the Japanese can exercise on the expiration date stipulated by option contracts, but the buyer of the option cannot exercise this right before the expiration date of the contract. Upon expiration, the contract will automatically become invalid. China's emerging foreign exchange options business is similar to European options, but different. We will explain it in detail in the lecture on foreign exchange options business in China.
According to the subject matter of the contract
There are stock options, stock index options, interest rate options, commodity options and foreign exchange options.
Special type
Path-related options The final return of standard European options only depends on the original asset price on the maturity date. Path-dependent option is a special option, and its final income is related to the change of the original asset price within the validity period of the option.
Path-related options can be divided into two categories according to the dependence of their final income on the original asset price path: one is that their final income is related to whether the original asset price reaches a certain or several agreed levels within the validity period, which is called weak path-related options; The final return of another option depends on the price information of the original asset during the whole option validity period, which is called strong path-related option.
One of the most typical weak path-related options is the obstacle option. Strictly speaking, American option is also a weak path-related option.
There are two kinds of strong path-related options: Asian option and look-back option. The return of Asian options on the maturity date depends on the average price of the original assets during the whole option validity period. Because of the different meanings of the average, it can be divided into arithmetic average Asian options and geometric average Asian options. The final income of the put option depends on the maximum (minimum) value of the original asset price within the validity period, and the holder can "look back" the whole price evolution process and choose its maximum (minimum) value as the final price.