01

It has been thirty years since China’s securities market was established in the 1980s.

The varieties that ordinary investors can participate in market transactions have also developed from the simplest bonds and stocks to various funds, commodity futures, financial futures and options, and of course the once-ephemeral warrants.

The launch of every new standardized product gives ordinary investors the opportunity to improve their trading dimensions, and the most representative of these are futures and options.

02

Compared with the single long model of buying and selling stocks to earn the price difference, which is most familiar to ordinary investors, the significance of futures and options is quite different. It gives ordinary investors the opportunity to enter the two-dimensional plane and the three-dimensional space.

Why do you say that? If we regard a single long position as a one-dimensional transaction, then futures that can be both long and short are two-dimensional planes. Furthermore, in addition to realizing long and short positions, it is also possible to trade volatility. By adjusting Greeks options for risk management, investors' strategies are pushed into the three-dimensional space.

If the market is an endless feast for gluttons, what kind of food it serves also depends on how developed the level of foodies is.

In the turbulent era, as long as you have meat, you can eat it. The number of listed companies is increasing, and everyone is flocking to it. It doesn’t matter whether it is good meat, rotten meat, lean meat, or fat meat.

If this goes on for a long time, indigestion is inevitable. At this time, smart people will start to choose between fat and thin. Futures come in handy. You can choose whether you want to eat fat or thin.

But Lao Tie is not satisfied with this. He not only has to choose fat and thin, but also pay attention to the parts and age of the meat. Just like a cook picking up cattle, asymmetric rights and obligations, as well as separate exercise prices, have become The sharpest knife in their hands.

It is this sharp table knife that gives infinite possibilities. As long as there is enough skill, it can satisfy anyone's needs on the market's plate.

Conservative people can use it to put on windbreakers, greedy people can use it to strip naked and run naked; timid people can use it to lay down cushions, and bold people can use it to grab all small things. It is beneficial; those who are good at catching fluctuations can use it to surf to their heart's content, and those who are willing to sit back and enjoy the gains can use it to eat up the value of time; the injured can rely on it to heal their wounds, and those who are healthy can rely on it to attack.

Everyone can use different option combinations to develop a strategy that suits his or her subjective judgment of the market, and achieve the ideal state of "advance to attack, retreat to defend".

From this point of view, the charm of options is really irresistible. It is no wonder that it is called the "crown jewel of trading." However, pearls are not easy to come by, and the pearl in the crown is not so easy to control.

Due to the variety of option portfolios and complex risk characteristics, many friends around me have difficulty adapting to the thinking of option portfolios and cannot persist in learning the basic knowledge. Some plan to give up, and some simply close their eyes. Directly, these are undesirable. The disadvantage of the former is that when dealing with transactions, the thinking cannot jump to a high dimension, while the latter is even more ignorant and fearless.

A higher transaction dimension means you have more options in your arsenal, and you also have to have a high-dimensional way of thinking to control them.

03

Learning and using options is a long and arduous process, but its stable returns will never let you down. For new options investors, it is recommended that you start from the following levels to gradually learn options and master the way of thinking that can control the dimensions of options trading:

Master the basics of options (mainly European options) contracts Characteristics, Greeks’ changing rules and hedging methods, as well as the reflection of Greeks’ correlation factors in the B-S formula and their impact on option contract pricing, understanding the three volatility calculation principles and changing characteristics;

Combined Understand the basic characteristics of option contracts, master the exchange’s various trading rules for options, especially regarding margins, price limits, position limit requirements and the exchange’s relevant regulations on handling abnormal situations, and establish risk control measures suitable for trading rules;

Learn and master the combination methods, applicable scenarios, and risk characteristics of various option strategy combinations. In particular, you must be proficient in the response measures that need to be taken when the market changes during the portfolio holding process, and be able to use them independently in practice ; At the same time, in view of the fact that the current domestic option market has few arbitrage opportunities for ordinary investors and its performance is poor, it is only necessary to understand the arbitrage strategy.

Achieving the above three points can be called a qualified option investor, able to have the thinking to control the dimensions of option trading and realize the functions that options can provide. But on this basis, many people will still go astray.

This is like giving you a sharp knife. Learning how to use it can only ensure that you do not hurt yourself to a certain extent. In this case, most people will overuse it, regardless of You use it when chopping melons and vegetables. This is actually a hazard and may dull your trading thinking, causing it to suffer backlash and degradation.

04

As the saying goes, "Good steel is used on the blade."

How to use the sharp blade in your hand where it should be used, especially in the moves you are good at, in order to maximize its lethality is something that an excellent options trader must seriously think about and hone. You can try the following aspects Get Started:

Make clear the goal of using options, whether it is to enhance returns or to hedge, to trade volatility deviations, to simply be used as a leverage alternative, or to have other more diverse goals;

Understand your own advantages in the trading model and systematize them, clarify which aspects of the existing trading model can be improved or fill in the gaps through the option portfolio, and improve the supporting risk control mechanism;

Combine the above two to develop a trading model and system suitable for you, achieve an effective closed loop, and substantially improve the trading dimension. The content that should be improved includes but is not limited to risk management, capital efficiency, winning rate and Profit and loss ratio, etc.

The practice of options trading is currently an emerging field in China, and it is also a flexible and ever-changing subject.

As an ordinary investor, grasping and using options faster, better and more accurately can enable them to occupy a favorable position in the future market and achieve "dimensionality reduction strikes" in the market field