1. What is the difference between options and stocks?

First, the transaction objects are different. The trading object of stocks is individual stocks, while the trading object of options is option contracts, that is, the right to buy or sell the underlying asset at an agreed price at an agreed time.

Second, the transaction methods are different. Stocks generally use all-cash transactions, while options require the option buyer to pay a premium and the option seller to pay a margin and receive the premium.

Third, the investment periods are different. As long as the listed company has not been delisted, investors can hold the company's shares for a long time. The option contract has a specific expiration date and will be invalidated when it expires.

Fourth, the income curves are different. Stock returns are linear and mainly come from stock price changes and dividends, that is, you earn as much as the stock price rises, and you lose as much as the stock price falls. Generally speaking, stocks can only earn gains if they rise. And option returns are non-linear. Through the combination of subscription, put, buyer and seller, options have corresponding strategies in various market conditions such as rising, falling, sideways and so on.

2. What is the difference between options and futures?

First, the rights and obligations of buyers and sellers are different. Both parties to a futures contract have equal rights and obligations. When the contract expires, the parties must buy or sell the underlying asset (or settle in cash) at the agreed price. The option contract is an asymmetric contract. The option buyer has rights but no obligations; the option seller has obligations but no rights (if the option buyer chooses to exercise the option, the option seller must fulfill his obligations).

Second, the margin regulations are different. In futures trading, both buyers and sellers need to pay a certain margin as a guarantee, and the margin is charged according to a linear proportion. In options trading, only the option seller is required to pay a margin, and the margin is generally charged according to a non-linear ratio.

Third, the risk-return characteristics are different. The benefits and risks of both parties in a futures contract transaction are symmetrical, and profits and losses vary with changes in factors such as the underlying price. However, the benefits and risks of both parties in option transactions are not symmetrical. The profit that the option buyer may obtain changes with changes in factors such as the underlying price, and the losses that may be incurred are limited (with the premium paid as the upper limit). The profit that an option seller may obtain is limited (captured by the premium collected), and the losses that may be incurred vary with changes in factors such as the underlying price.

Fourth, the income curves are different. The profit and loss characteristics of futures are linear, and the main trading direction is the up and down direction. The profit and loss characteristics of options are nonlinear, and it is necessary to pay attention to the rise and fall of the underlying price, volatility changes, and remaining expiration time at the same time. Through the combination of different types of contracts, a more diverse and three-dimensional yield curve can be achieved.

Fifth, risk management functions are different. When holding the underlying, futures and options can avoid part of the underlying price risk by offsetting futures profits and losses. The difference between the risk management functions of futures and options is reflected in the following: when the underlying price changes in a favorable direction, futures gives up the opportunity for the underlying to obtain further profits, while options retain the possibility of further profits for the underlying.

The profit and loss charts of futures and options are as follows:

3. What is the difference between options and warrants?

There are obvious differences between options and warrants.

First, the issuing entities are different. Warrants are usually issued by third parties such as listed companies of the underlying securities, investment banks or major shareholders. There is no issuer for options, and both parties to the transaction are investors.

Second, the contract characteristics are different. Some elements corresponding to the warrant contract are determined by the issuer. The option contract is a standardized contract, and its exercise price, subject matter, expiration date and other factors are uniformly stipulated by the exchange.

Third, the contract supply is different. The supply of warrants is limited, determined by the issuer, and is subject to factors such as the issuer's willingness, financial strength, and the number of underlying securities circulating in the market. The supply of options is theoretically unlimited.

Fourth, performance guarantees are different. The warrant seller, that is, the warrant issuer, uses its assets or credit to guarantee performance, while the option seller needs to pay a deposit to guarantee its performance obligation.