Option is a financial instrument based on futures. In essence, the option is to price power and obligation separately in the financial field, so that the transferee of power can exercise power on whether to trade or not within a specified time, and the obligor must perform it. In option trading, the party who buys the option is called the buyer, while the party who sells the contract is called the seller. The buyer is the transferee of power, and the seller is the obligor who must perform the buyer's exercise of power.

For example, 65438+ 10 month/day, the subject matter is copper futures, and its option exercise price is 1 850 USD/ton. A buys this right and pays $5; Sell this right and get 5 dollars. In February 1, copper futures price rose to 1905 USD/ton, and call option price rose to 55 USD. A can adopt two strategies:

Exercise-A has the right to buy copper futures from B at the price of 1.850 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 strike price of 1.850 USD/ton, while A can 1.900. B will lose $50/ton (1850- 1905+5).

Put right-A can sell a call option at a price of $55, and A earns $50/ton (55-5).

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 patent fee of 5 USD, while B will make a net profit of 5 USD.