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What is the impact of options on futures?
What is the function of options on futures?

1. option can improve the futures trading mechanism and promote the smooth operation of the futures market. As a perfect futures market, there should be an option trading mechanism. Judging from the current situation of the world commodity futures market, commodity futures options are a common trading method. Futures speculators assume the function of market lubricant, but their own risks cannot be transferred. Futures trading is often a contest between different speculative forces on the direction of price rise and fall, and market participants are all directional traders, which is easy to cause problems such as forced liquidation and huge delivery. Therefore, the domestic futures market was once in the contradiction between market size and risk control. While the market transactions are active and the scale is expanding, the market risks are also expanding rapidly, which often leads to large price fluctuations.

As a risk management tool of futures trading, option trading will not create new risks outside futures trading. The biggest risk faced by option sellers is the risk of futures trading, which will not amplify the risk. Option contracts are very common in the international commodity futures market, and option trading is showing a growing trend, which fully reflects the strong demand of the market and shows the vitality of option trading. The development of China's futures market has produced and there is an objective demand for options trading. Sugar, soybean, copper and other futures varieties have already had the market foundation to carry out futures option trading, and the options trading of sugar, soybean and copper is ready to come.

2. Options can effectively control futures risks. Futures are spot hedging and options are futures hedging. Speculators in the futures market can avoid the risk of futures positions through options and reduce the risk of forced liquidation caused by exposure of positions. There are many options trading strategies, which can meet the needs of avoiding market risks in various situations. Without options, futures investors have no suitable tools to manage their own trading risks, so they can only adopt the trading method of chasing up and killing down, which will further aggravate market volatility and even lead to price rise or fall when prices fluctuate greatly. However, the suspension of market prices further aggravated the market panic, causing more investors to flee at the suspension price, which in turn led to continuous unilateral non-quotation, and the overall market risk expanded rapidly.