Option refers to a contract that gives the holder the right to buy or sell assets at a fixed price on or before a certain date.
The relationship between futures and options:
(1) From the transaction characteristics, both of them are transactions characterized by buying and selling forward standardized contracts;
(2) In terms of time, there is a futures market first, and then there is an option transaction. It can also be said that the development of the futures market has laid the foundation for the emergence and development of option trading, and the maturity and complete rules of the futures market have also created conditions for the emergence and development of option trading. In other words, the emergence and development of option trading provides more optional tools for speculative arbitrageurs and hedgers to guard against price risks, and further enriches the trading content in the futures market;
(3) In terms of price relationship, the futures market price has an influence on the determination of the contract price and premium of option trading. Generally speaking, the price of option trading is based on the delivery price of similar commodities in futures contracts, and the difference between them is an important basis for determining the premium;
(4) From the perspective of trading mechanism, futures trading can be short-selling or short-selling, and traders do not necessarily make physical delivery. Option trading can also be short selling and short selling.
(5) From the performance position, the subject matter is the option of the futures contract, and the buyer and the seller will get the corresponding future positions when performing the contract.
Correlation between futures and options;
From the definition of options, options are financial instruments derived from tangible assets such as futures, securities and indexes, so their trends are basically consistent with these basic tools. This consistency is mainly manifested in the similarity of transactions, the similarity of fundamental analysis of supply and demand, the similarity of technical figures and indicators, the similarity of seasonal trends, the similarity of positions and positions, and so on. As a basic tool, the price of futures is also an important factor to determine the price of options, which determines whether the options are real, flat or imaginary.
The difference between futures and options:
In addition to the close relationship with the basic tools, options have their own characteristics and independence, among which the loss of time value and market fluctuation are particularly important. Usually, compared with futures, options expire 20-25 days earlier, and the loss of time value will be accelerated 30-45 days before the expiration date of options. In addition, the price trend of options is sometimes not highly correlated with the price trend of futures. In a highly volatile market, the option seller will find that the decline in the value of the options he sells is much smaller than expected, and the change in the futures market is even smaller. In the light market, the option buyer will find that although the market has changed a few cents, the option premium has changed little or even lost its value.