It has the characteristics of "zero-sum game", and both individual stock options and index options can be combined for arbitrage trading or hedging trading.
Options can be divided into call options and put options. The former is also called call option or call option, and the latter is also called put option or put option. There are four kinds: 1. Long call) 2. Short call) 3. Long play) 4. Short.
Option trading is actually the trading of such rights. The buyer has the right of execution and the right of non-execution, and can choose flexibly. Options are divided into OTC options and OTC options. OTC options trading is generally reached by both parties.
Related assets
Basic assets (basic assets)
Every option contract has an underlying asset, which can be any of many financial products, such as common stock, stock index, futures contract, bonds, foreign exchange and so on. Usually, the option whose underlying asset is stock is called stock option, and so on. Therefore, options include stock options, stock index options, foreign exchange options, interest rate options and futures options. Usually listed on stock exchanges, options exchanges, futures exchanges, and of course there are also over-the-counter transactions.
Option is a financial instrument based on futures. The greatest charm of this financial derivative is that it allows the buyer of the option to lock the risk in a certain range. In essence, the option is to price the rights and obligations in the financial field separately, so that the transferee of the right can exercise his rights on whether to trade or not within a specified time, and the obligor must perform it. When trading options, the party who buys the options is called the buyer, while the party who sells the contract is called the seller. The buyer is the transferee of the right, and the seller is the obligor who must fulfill the buyer's right. Specific pricing issues are comprehensively discussed in financial engineering.
English-Chinese dictionary of securities investment of Commercial Press. Also known as option contracts. Option contract A trading contract in which financial derivatives are used as execution varieties. Refers to the right to buy and sell a certain number of trading varieties at a specific price within a specific time. The buyer or the contract holder has the right to pay the deposit option fee; The contract seller or obligee (obligee) collects the option fee, and when the buyer wishes to exercise his rights, he must fulfill his obligations. Option trading is an auxiliary means of investment behavior. When an investor is optimistic about the market outlook, he will hold a call option, and when he is bearish on the market outlook, he will hold a put option. Option trading is full of risks, and once the market develops in the opposite direction to the contract, it may bring huge losses to investors. In practice, most contracts have been closed before expiration (in this case, American options and European options must be executed on the contract expiration date).
Options are mainly composed of the following factors: ① strike price (also called strike price, strike price). The buying and selling price of the subject matter specified in advance when the buyer of the option exercises his rights. Royalties. Option price paid by the option buyer, that is, the fee paid by the buyer to the option seller for obtaining the option. ③ Performance bond. Option sellers must deposit performance bonds, ④ call options and put options on the exchange. Call option refers to the right to buy a certain number of subject matter at the execution price within the validity period of the option contract; Put option refers to the right to sell the subject matter. When the option buyer expects the target price to exceed the strike price, he will buy a call option, and vice versa.
Each option contract includes four special terms: the underlying asset, the exercise price, the quantity and the exercise period.
Pre-order stock price
Option strike price (strike price or strike price)
The price used to buy and sell the underlying assets when exercising options. In most options traded, the underlying asset price is close to the exercise price of the option. The exercise price is clearly stipulated in the option contract, which is usually given by the exchange in the form of decreasing or increasing according to certain standards, so there are several different prices for options with the same target. Generally speaking, when an option is just traded, each option contract will give several different exercise prices at certain intervals, and then increase according to the changes of the underlying assets. As for how many exercise prices each option has, it depends on the price fluctuation of the underlying assets. When investors buy and sell options, the general principle of choosing the exercise price is: choose the exercise price with active trading near the underlying asset price.
amount
Quantity (quantity)
The option contract clearly stipulates that the contract holder has the right to buy or sell the quantity of the underlying assets. For example, the number of shares traded in a standard option contract is 100, but there are exceptions in some exchanges, such as the option contract traded on the Hong Kong Stock Exchange, where the number of underlying shares is equal to the number of shares traded per lot.
Exercise time limit
Exercise period (expiration date) (expiration date or expiration date)
Every option contract has an effective exercise period, after which the option contract is invalid. Generally speaking, the exercise period of options ranges from one to three months, six months and nine months, and the option contract of a single stock is valid for up to nine months. The expiration date of OTC options is tailored to the needs of buyers and sellers. However, in the options exchange, any stock must be divided into a specific period of validity, which can be divided into the following categories: ① 1 month, April, July,1month; ② February, May, August and November; ③ March, June, September and December. They are called January cycle, February cycle and March cycle respectively.
According to the different execution time, options can be mainly divided into two types, European options and American options. European option refers to the option that can only be executed on the expiration date of the contract, which is adopted in most floor transactions. American options refer to options that can be exercised on any day after trading, and are mostly adopted by OTC exchanges.
Differences between European and American styles
The main difference between European options and American options lies in the execution time.
(1) American option contracts can be performed at any time before or after the expiration date, and the settlement date is one or two days after the expiration date. Most American option contracts allow the holder to perform at any time between the trading day and the performance date, but some contracts stipulate a relatively short period, such as "two weeks before the expiration date".
(2) The European option contract requires its holder to perform the contract only on the due date, and the settlement date is one or two days after the performance. At present, domestic foreign exchange option trading is a European option contract.
By comparison, the conclusions are as follows: European options make less profit, but they are not flexible in the time of profit; Although American options are flexible, they are very expensive to pay. Therefore, most international options transactions are European options.
The difference between options and equity
Equity (limited liability company) and stock (joint stock limited company) are the owner's rights enjoyed by shareholders based on their qualifications. Simply put, getting the equity means that you are already a shareholder of the company.
"Option" is a kind of right, which is the right that the company grants the incentive object to buy a certain number of shares of the company at a predetermined price and conditions in the future. This right can be exercised after the company goes public or before it goes public. Simply put, getting the option only means that it may be a shareholder of the company.
In terms of image, equity represents shareholders, while options exist more with the mission of encouragement.