Natural rubber, also known as natural latex, ranks as "four strategic materials" along with petroleum, coal and steel. China is the largest consumer of natural rubber in the world, and the consumption structure of natural rubber is mainly in the tire industry. It needs to import a large amount of natural rubber every year, accounting for 45% of the total global consumption and occupying an important position in the global industrial chain. However, the domestic output is seriously insufficient, which is far from the domestic demand. The overall self-sufficiency rate is less than 15%, so the domestic rubber price is greatly influenced by the international rubber price. The listing of natural rubber options will help to enhance China's pricing power in the commodity market.
What is the natural rubber option?
Let's review what options are first. Options, also known as options. "Term" represents the future, and "right" represents the right, which means that the buyer of the option has the right to buy or sell a certain number of subject matter at the agreed price within the agreed time. The buyer shall pay the royalties for the acquired rights, and the seller shall collect the royalties as the party performing the obligations.
Give a chestnut
If you want to buy a car, you need to pay a deposit of 6,543,800 yuan and sign a contract with a store in 4S. According to the contract, in the next three months, no matter how the market price of the car changes during this period, you can buy the car at a price of 6.5438+0 million yuan.
The deposit of 65,438+0,000 yuan here is the commission.
It was your right to buy or not. Even if the car price rises to 654.38+0.05 million two months later, the 4S shop must sell it to you as agreed. If the car price drops, you can choose not to buy it, with a maximum loss of 1 1,000 yuan deposit.
Generally speaking, natural rubber option is actually the abbreviation of natural rubber futures option. Buying natural rubber options means having the right to buy a certain number of natural rubber futures contracts at an agreed price in the future.
02. The significance of listing natural rubber options.
1. Complete the risk management problem.
The price of natural rubber fluctuates sharply, and the fluctuation level is high among the listed agricultural products futures, so the demand for risk management is huge and urgent. Since 20 16, "insurance+futures" has been written into the No.1 document of the Central Committee for three consecutive years, which provides an effective means for rubber farmers to manage price risks. On-site options can be combined with futures to complete the puzzle of risk transfer mechanism.
2. Enhance the pricing power of bulk commodities
Natural rubber options can not only meet the risk management needs of rubber farmers and rubber industry enterprises, but also enrich the natural rubber products in China futures market, further expand the scale of natural rubber futures market, and urge the natural rubber futures market to find more real prices. Under the background of the "Belt and Road Initiative" and the policy of building a free trade port in Hainan Province, the introduction of natural rubber options can enhance the international influence of China's natural rubber futures market and enhance the pricing power of bulk commodities.
3. Help eradicate poverty
Natural rubber producing areas in China are located in Yunnan and Hainan provinces, where poverty-stricken counties are concentrated. Introducing natural rubber option will help to overcome poverty and revitalize the countryside.
03. Understand the elements of natural rubber option contract.
The natural rubber option was listed in the last issue of1October 28th 20 19 65438+. The following is a list of elements of natural rubber option contract:
04. Application of natural rubber options
Facing the drastic fluctuation of market price, natural rubber options have outstanding advantages in hedging and avoiding risks. On the one hand, the application of natural rubber options can increase the anti-risk ability of buyers and sellers, on the other hand, it can also improve the management level of profits and reduce the operating costs of enterprises, thus improving the competitiveness of enterprises.
1. Lock in profits and avoid the risk of rising raw material prices.
For the downstream terminal enterprises of natural rubber, the most hope is to purchase raw materials at the lowest possible price, and the biggest risk is the profit decline or loss caused by the rising price of raw materials. In order to solve the above risks, enterprises can buy call options that match the quantity of raw materials in the order when accepting the order.
If the price of raw materials rises, the profit of call option can make up for the loss caused by the rising price of raw materials; If the price of raw materials falls, they will give up their exercise and buy goods at a low price in the market. The loss is only the option fee paid at the beginning, but the profit of the enterprise will increase because of the decline in raw material prices.
Using call options to manage the purchasing risk of enterprises can determine the lower profit limit of each order, and the profit rate will increase with the decline of raw material prices.
Case 1: Buy a call option
After natural rubber stops cutting every year, the spot price and futures price will rise seasonally. A, the owner of a tire company, hopes to avoid the cost increase caused by the rising price of natural rubber by hedging. Suppose an enterprise wants to purchase a batch of finished rubber products after 3 months. At present, the call option with the rubber market price of 1 1600 yuan/ton and the enterprise's exercise price of 12000 locks in the maximum purchase cost. If the price of natural rubber rises more than12,000 yuan/ton in the later period, the enterprise can exercise the purchase right at the price of12,000 yuan/ton; If the price of natural rubber falls, although the call option has no exercise value, the falling price of natural rubber means that the procurement cost is reduced and the profit margin of the enterprise is increased.
Case 1: The price of natural rubber exceeds 1.2 million yuan. No matter how high the price is, the enterprise can exercise the buyer's royalty and purchase at the price of10.2 million yuan/ton.
Case 2: The price of natural rubber rises, but the range is limited to 16000~ 12000. The option premium of 3 12 is the sunk cost, but the maximum risk is limited, which is 7 12 yuan/ton.
Case 3: the price of natural rubber fell but ≥ 1 1288, the profit of spot position (lower purchase cost), and the option paid royalties.
Case 4: After the price of natural rubber fell below 1 1288, the spot purchase cost was greatly reduced, and the hedging portfolio was profitable as a whole.
Enterprises can effectively reduce the adverse effects caused by changes in raw material costs by using options, so as to obtain relatively stable income. In the unpredictable market environment, enterprises can free up more space to focus on improving their technical strength and competitiveness.
2. Manage the sales price to ensure the price of the goods in stock.
For an enterprise with a long production cycle, although it is profitable to arrange the production plan at the beginning, when producing goods, if the price of finished products falls, it may cause losses to the enterprise, or when the market is good, the goods cannot be produced overnight. Corresponding to these two situations, the lowest selling price of finished products can be locked by buying put options, thus ensuring the profits of enterprises.
Buying a put option is equivalent to buying an insurance for commodity prices. If the market price falls, exercise the right, and if the market price rises, give up the right. This commodity is sold at a higher price in the market.
Case 2: Buy Put Option
A rubber processing enterprise B, which has some unsold rubber products in stock, is worried that the future price drop will lead to a decline in processing profits or even losses, and decides to use put options for hedging. At present, the market price of rubber in the market is 1 1600 yuan/ton, and Enterprise B insures the inventory products by purchasing put options with exercise price of 1 1250 yuan/ton. If the price falls, the profit of the option position can make up for the loss of the spot position; Once the price moves towards the spot and rises sharply, although the option pays the premium, it retains the space for the spot to continue to make profits.
Case 1: The price of natural rubber exceeds 1.2 million yuan. No matter how high the price is, the enterprise can exercise the buyer's royalty and purchase at the price of10.2 million yuan/ton. In addition, no matter how much the price of natural rubber rises, the maximum total loss is 443 yuan/ton.
Case 2: The price of natural rubber rose, but the range was limited to 1 1557 (breakeven point) ~ 12000. The options were inflated, the spot cost increased, and the portfolio loss = spot loss +43 yuan/ton.
Case 3: When the rubber price drops on the same day, but it is ≥ 1 1250, the spot position gains (the buying cost is reduced), and all options are in a virtual state and will not be exercised. Comprehensive profit = spot profit -43 yuan/ton.
Case 4: After the price of natural rubber fell below 1 1250, the spot purchase cost was greatly reduced, the put option sold became a real option, and the call option bought was a virtual option and would not be exercised.
3. Sell covered options to obtain fixed income as a subsidy for excess income or spot loss.
For some enterprises that think that the premium cost of buying options is too high or have no clear judgment on the price trend, they can consider changing their thinking and preparing to sell options by realizing the goods. Royalty income from selling options can be regarded as fixed income. If the option terminal is exercised in the later period, although it will face compensation losses, the spot terminal will gain gains from price changes to achieve the purpose of hedging; If the option is not exercised, the royalties collected can subsidize the decline in the sales price of the inventory.
Case 3: Selling covered call options
Rubber trader C has natural rubber in stock, and the market price of natural rubber is 1 1600 yuan/ton. It is expected that the price of natural rubber will not fluctuate greatly, but he is still worried about the price drop and wants to reduce the inventory cost. Therefore, he sells the call option with the exercise price of12,000 yuan/ton, and receives the royalty of 3 12 yuan/ton. In this way, the enterprise reduces the production cost by 3 12 yuan/ton. As long as the price of natural rubber fluctuates slightly in the future, enterprises can earn patent fees stably.
Case 1: The price of natural rubber is lower than 1 1250. No matter how low the price is, the enterprise can exercise the buyer's commission and sell the products at the price of 1 1250 yuan/ton. In addition, no matter how much the price of natural rubber falls, the maximum total loss is 307 yuan/ton.
Case 2: The price of natural rubber fell, but the range was limited to11250 ~1557 (breakeven point), all options were in a virtual state, and spot losses occurred, and consolidated losses = spot losses -43 yuan/ton.
Case 3: the price of natural rubber increased, but the range was limited to11557 ~12000. Spot position gains and options are in a virtual state and will not be exercised. Comprehensive profit = spot profit +43 yuan/ton.
Case 4: After the price of natural rubber broke through 12000, the spot profit increased greatly, the call option sold became a real option, and the put option bought was virtual, so the whole portfolio was profitable.
Through three cases, is the application of natural rubber options clearer? Learn options knowledge and apply it!