Compared with investment tools such as stocks and futures, the nonlinear profit and loss structure of options is different. It is the nonlinear profit and loss structure of options that makes options have obvious advantages in risk management and portfolio investment. Through different options, option combinations and other investment tools, investors can build portfolios with different risk-return conditions.
The main features are:
1, the profit and loss of option trading are different, and the buyer's profit is infinite and the loss is limited; The seller has limited profits and unlimited losses. The buyer's option loss is only
Limited to the expenditure of option fees, but its income is unlimited. The seller's income is limited, only the option fee, but the loss is infinite.
2. Option trading is a kind of right trading, which is the right to buy and sell a certain commodity. The buyer will benefit from the market price within the validity period stipulated in the option contract.
Exercise this right only when it is unfavorable, and you can give up exercising options when it is unfavorable; The seller shall undertake the delivery obligation required by the buyer.
3. Limitation: If the right is not exercised beyond the prescribed validity period, the option will automatically become invalid.
4. Options have greater leverage than futures trading.
5. Option trading is more flexible than futures trading. Trading doesn't have to open an account in an exchange, and both sides of the transaction require their own trading partners. Trading options can prevent the market exchange rate,
Risk of interest rate and price changes; Through superb trading technology, we can achieve the purpose of profitability and transform short-term capital gains into long-term capital gains.