As a natural worker, we often hear equity incentive and option incentive in practical work. What do they mean? In fact, options and equity are two different concepts. So what's the difference between the two?

What do equity and options mean?

What's the difference between equity and option? Many people still don't know the difference between equity and option. Today, Bian Xiao will answer these questions for you. Now let's have a look! Option is a contract and a derivative of financial products. As long as the retail investors meet the opening conditions of options, they can buy and sell options, and they can buy up or down. Equity generally refers to the rights acquired by shareholders. For example, if a shareholder holds 20% of the shares of a company, it means that the shareholder owns 20% of the shares.

What's the difference between equity and option?

Equity is the right of shareholders, enjoying comprehensive rights to the personal rights and property rights of the company, and the buyer of options has the right to exercise the right of delivery according to the contract price. Equity is both non-property and property, which can be divided and transferred. The gains and losses of options are asymmetric and nonlinear. The buyer of options has limited losses (royalties) and unlimited gains, while the seller of options has limited gains (royalties) and endless losses.

Which is better, option or equity? In fact, there is no comparison, because the scope of options and equity representatives is different. Option is a trading mode, and its subject matter can include physical objects, securities and futures contracts. The holder of equity needs to bear certain obligations if he wants to enjoy rights. Equity investment and option investment have different advantages in investors' investment strategies. The advantages of equity investment are higher rate of return, lower risk and longer investment period, while the advantages of option investment are lower investment cost, higher income and shorter investment period.

Source Baidu: Caishun Option ~

Option knowledge extension:

When trading with options, there will be the price of options, which is usually called "royalty" or "option fee". An option contract has tens of thousands of trading units. The calculation method is to multiply the latest price by 10000 to get the royalty cost of an option contract. Calculation formula of royalty: current contract price * 10000= royalty.