Stock option contract: a standardized contract formulated by Shanghai Stock Exchange, which stipulates that the buyer has the right to buy or sell the agreed shares at a specific price at a specific time in the future, or a transactional open index fund (ETF) that tracks the stock index.
By paying a certain fee to the seller, the buyer of the option obtains a right, that is, the right to buy or sell an agreed number of specific stocks or ETFs from the option seller at an agreed time and at an agreed price. The buyer can also choose to give up exercising his rights. If the buyer decides to exercise his rights, the seller is obliged to cooperate and must cooperate.
The key points of the option contract are as follows:
Option price: Also known as royalty, option fee and insurance premium, it is the fee paid by the option buyer to the seller to obtain the right to buy or sell an asset at the agreed price within the agreed period.
Target asset: also known as target, it is the target of option contract, and it is the asset that the buyer buys or sells when exercising the rights stipulated in option contract.
The underlying assets of options can be spot assets or futures assets; It can be physical assets, financial assets or financial indicators (such as stock price index). ).
Exercise direction: refers to the operation direction of the option buyer when exercising.
The right of the option buyer can be to buy the underlying assets or to sell the underlying assets. So there are two directions of exercise: buying and selling. The exercise direction depends on whether the option type is a call option or a put option.
Contract target: The target of individual stock option contract is a single stock or ETF listed on the exchange.
Validity: Option is a kind of right certificate. After paying the option fee, the buyer obtains the right to buy and sell specific assets at the agreed price within the agreed period. If the right is not exercised within a specific period, the option will be invalid, and the buyer will no longer enjoy the right and the seller will no longer assume the obligation after the expiration.
Contract expiration date: the date when the validity of the contract expires, and it is also the latest date when the option buyer can exercise his rights.
Exercise price: also known as exercise price or exercise price, it is the price at which the buyer buys or sells the underlying assets when exercising his rights as stipulated in the option contract.
Contract unit: the number of contract targets corresponding to a stock option contract.
Transaction amount of stock option contract = royalty × contract unit
Royalty: refers to the market price of the option contract.
Royalty consists of intrinsic value (also called intrinsic value) and time value.
Exercise price range: it is the difference between the exercise prices of two adjacent stock options, which is generally set in advance.
Delivery method: it can be divided into physical delivery and cash delivery.
Physical delivery means that after the option contract expires, the right party who subscribes for the option pays cash to buy the underlying assets, and the obligation party who subscribes for the option sells the underlying assets in cash; Or the obligee of the put option sells the underlying assets to earn cash, and the obligor of the put option buys the underlying assets and pays cash.
Cash delivery means that the buyer and seller of options pay the difference in cash according to the settlement price, which does not involve the transfer of the underlying assets.