Second, market liquidity risk. Market liquidity risk mainly refers to the lack of market depth and breadth, and the inability to hedge and close positions at reasonable prices. Even if there is a loss, you can't stop the loss in time and watch the loss expand. Option trading contracts can be divided into call options and put options, as well as different maturity months and different exercise prices of enterprises. There are a large number of 50etf option contracts with inactive trading.
Third, the risk of price changes. Option is a financial derivative with complex leverage. There are many factors that affect the market price of options, including teaching target price, exercise price, remaining labor time, volatility, risk-free interest rate, dividend yield and so on. The fluctuation of the above factors affecting the pricing of enterprise options will bring the risk of option price fluctuation. Option investors need to evaluate and manage the risk of price fluctuation through Greek value, situation analysis and stress test.
Fourth, the investment risk arising from the contract. And the option has an expiration date, and the contract of the month is on the fourth Wednesday of a month. Option buyers (obligees) should be prepared to apply for exercise, and option sellers (obligees) should be prepared to perform their obligations. There are corresponding contract elements, the expiration date of the option contract.
As the name implies, the expiration date refers to the expiration date of the stock option contract, which is the final completion date for the option holder to exercise the state rights by himself. Option contract has the characteristics of limited life cycle. When investors trade options, another enterprise risk of option investment-maturity debt risk. As an option right or obligation, what is the maturity risk faced by investors?
For example, for the holders of 50ETF options, the time value of the options will gradually decrease as the contract expiration date approaches. When the expiration date approaches, the obligee will lose all royalties. The development of investors requires us to realize that the holder of options has rights, but this right has a time limit. If the market volatility fails to meet expectations within the specified period (for example, the current price of 50 ETF fails to rise above the exercise price of call options), it will not help at this time.
Stock option trading is actually a kind of equity trading, that is, buyers and sellers of a stock option can buy and sell a certain number of stocks at any time at the price stipulated in the option contract within the specified period, regardless of the rise and fall of the stock market price.