According to experts of easy carbon, OTC options trading of carbon emission rights is an OTC non-standardized carbon financial innovation product in which both parties sign a non-standardized written option trading contract with carbon emission rights as the subject matter and entrust the exchange to supervise the use fee and contract execution. Both parties to the transaction determine the exercise period and exercise price when signing the contract. After the option buyer decides whether to execute the contract during the exercise period, he entrusts the exchange to complete the contract execution as agreed by both parties.
Option trading makes up for the defect that forward trading only protects the present value but not the future value. It has great flexibility. For contract holders, when the price is favorable to them, they will take non-delivery measures to make their price risk loss less than or equal to the insurance premium.
Option is an effective risk management tool. Options are based on futures contracts and can be said to be derivatives of derivatives.
Therefore, options can be used to protect the value of spot and futures transactions.
Options provide investors with more investment opportunities and investment strategies. In futures trading, only when the price changes directionally can the market have investment opportunities. If the price is in a consolidation period with less fluctuation, the market lacks investment opportunities.
In option trading, whether the futures price is in a bull market, a bear market or a consolidation, it can provide investors with opportunities to make profits.
Options can provide investors with greater leverage. Compared with the futures margin, the same number of contracts can be controlled with less use fees.