Futures refers to the standardized contract made by the futures exchange, which stipulates to deliver a certain number of subject matter at a specific time and place in the future. An option is an option, which is the right to buy or sell a certain quantity of a certain commodity at a certain price at a certain time in the future. Option is the buying and selling of a certain right, and it is a way of trading that the buyer of option obtains the right to buy and sell a certain commodity at a certain time in the future after paying the option premium.
Compared with futures, options have unique advantages in capital occupation and profit acquisition. First of all, due to the daily debt-free settlement and margin trading system of futures, enterprises are faced with great financial pressure in the whole process of hedging with futures, while when hedging with options, only the initial equity expenses are paid, and no matter how the market changes, no additional funds are needed. The capital pressure is less than that of futures when hedging in the same scale.
Secondly, when futures are used for hedging, the profit at the futures end and the loss at the spot end offset each other, thus locking in the risk. However, if the spot price develops in a favorable direction for the enterprise, the profit generated will also offset the loss of the futures end, that is, the enterprise will lose the profit opportunity when the spot price changes favorably. However, if the option is used for hedging operation, because the enterprise only needs to pay the corresponding premium when purchasing the option at the beginning of the transaction, and there is no requirement for the subsequent deposit, the maximum loss of hedging is fixed regardless of the market trend, that is, the premium paid when purchasing the option, and the enterprise can still retain the profit opportunity when the spot market price changes in the direction favorable to the enterprise.
Finally, because the nature of options is similar to insurance, enterprises have the right to buy or sell the corresponding subject matter when purchasing options, but not the obligation. Therefore, enterprises that use options to hedge can choose to exercise or give up according to their own actual situation, and the requirements for professional knowledge and trading skills of relevant personnel are lower than those of futures operation, which can allow more enterprises to participate in the market and help to further expand the scale of the whole natural rubber futures market.