Exercise-A has the right to buy copper futures from B at the price of 1850 USD/ton; After A puts forward the requirement of this exercise option, B must meet it. Even if B has no copper, it can only be bought in the futures market at the market price of 1.905 USD/ton, and sold to A at the exercise price of 1.850 USD/ton, while A can be sold in the futures market at the market price of 1.905 USD/ton, making a profit of 50 USD. B lost 50 dollars.
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 royalty of 5 USD, while B will gain a net profit of 5 USD.
(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. At this point, A can adopt two strategies:
Exercise the right-A can buy copper from the market at the market price of 1.695 USD/ton and sell it to B at the price of 1.750 USD/ton, and B must accept it. A will make a profit of $50 and B will lose $50.
Put option -A can sell the put option for $55. The profit is 50 dollars. If the copper futures price rises, A will give up this right and lose $5, while B will get $5.
Through the above examples, we can draw the following conclusions: First, as the buyer of options (whether call options or put options), he has only rights but no obligations, and his risks are limited (the biggest loss is royalties), but his profits are theoretically 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.