Option is also called option, and 50ETF option refers to the right of option buyer (obligee) to buy or sell (subscribe or put option) a fixed number (contract unit) of underlying assets (50ETF) from option seller (obligor) at an agreed price (exercise price) in the future by paying a certain fee (royalty).

Option contracts's Conceptual Analysis

1. What are the buyers and sellers of the option?

Option buyers, also known as obligees, obtain the agreed rights by paying royalties, but do not assume obligations.

Option sellers are also called debtors. By collecting royalties, they must bear the agreed obligations, but they have no right.

The relationship between the two is similar to that between the insured and the insurance company. Option buyers are like the insured. By paying the premium, the insured has the right to claim compensation from the insurance company when an accident occurs during the insurance period. If there are no accidents during the insurance period, the biggest loss is only the insurance premium.

On the other hand, option sellers are like insurance companies. If the insured does not make any claims during the insurance period, the biggest gain is the total premium, and once the insured makes claims, the amount of claims may far exceed the premium itself.

Therefore, for the option buyer, option is an investment method with limited risk and unlimited theoretical income.

For option sellers, options are an investment method with limited returns and unlimited theoretical risks.

2. What is the royal family?

If the option buyer wants to have the right, he must pay a certain fee to the option seller, which is called royalty. The size of royalties is mainly affected by the duration, execution price, market price and volatility. If the longer the expiration time, the greater the market fluctuation, and there is a profit spread between the expiration exercise price and the current market price, it means that the option is more favorable to the buyer and unfavorable to the seller, so the premium price of the option contract is relatively high, and vice versa.

Example:

When the market price is 2.8 yuan, the call option with the strike price of 2.7 yuan due in the current month is quoted at a premium of 0. 1300. It means that you can buy a call option by paying the royalty of 1300 yuan, and have the rights granted by the call option.

3. What is the strike price of the option?

The exercise price of an option refers to the price at which the option buyer buys or sells the underlying assets from the option seller when the option buyer exercises its rights at maturity.

4. What are call options and put options?

If it is agreed that the buyer has the right to buy a fixed number of 50ETF at the agreed price, the option is called a call option.

If it is agreed that the buyer has the right to sell a fixed number of 50ETF at the agreed price, the option is called a put option.

Example:

A 50ETF call option contract with an execution price of 2.7 yuan, which expires next month, stipulates that the buyer of the call option has the right to buy 65,438+00,000 50 ETFs from the option seller at the price of 2.7 yuan when the expiration date comes next month, regardless of the market price of 50 ETFs.

A 50ETF put option contract with the execution price of 2.6 yuan expires in the same month, and it is stipulated that the put option buyer has the right to sell 65,438+00,000 50 ETFs to the option seller at the price of 2.6 yuan at the expiration of that month, regardless of the market price of 50 ETFs.

Option knowledge @ option sauce

How to profit from 50ETF options

1. Earn the difference between buying low and selling high before maturity.

Buy a 50ETF call option at will, and then if the market price of 50ETF rises sharply, it will drive the contract premium of all call options to rise, liquidate the bought call options and earn the difference between low premium and high premium.

Buy a 50ETF put option at will, and then if the price of 50ETF drops sharply, it will drive the premium of all put option contracts to rise, close the bought put option and earn the difference between low premium and high premium.

Note: 1: The rise and fall of the use fee is mainly affected by the rise and fall of the 50ETF price itself, as well as secondary factors such as implied volatility and maturity time.

Note 2: The fluctuation range of premium will be different when buying option contracts with different strike prices and different maturities. Generally speaking, the higher the actual value and the shorter the term, the greater the absolute value of intra-day fluctuation of premium. The higher the degree of imaginary value, the longer the maturity time and the smaller the absolute value of intra-day fluctuation of premium.

Note 3: As an option buyer, if the price of 50ETF keeps fluctuating within a narrow range after buying, the time value will shrink as the maturity date approaches, which will also lead to the daily decline of the equity premium, which is like sailing against the current. If you don't advance, you will retreat.

2. When the option expires, earn the difference between the exercise price of the option and the market price.

When the option contract expires, the time value of the option contract is zero, and the profit difference between the exercise price and the market price of the option contract is the final trading profit. For call options, if the market price at maturity is lower than the execution price of the contract, the bullish option contracts will become worthless, while for put options, if the market price at maturity is higher than the execution price of the contract, the bearish option contracts will become worthless.