Asymmetric rights: In option trading, the buyer has the right to choose whether to execute the contract before the option expires. On the other hand, when the buyer chooses to exercise his rights, the seller has the obligation to perform the contract. This asymmetry of rights makes the buyer of options more flexible and selective.
Asymmetry of potential loss: For the option buyers, they only need to pay a certain premium as the option fee, and the biggest loss is the paid premium. However, the potential loss of the seller is infinite, especially in the case of put options. If the price of the underlying asset rises, the seller may face no upper limit.
Asymmetry of obligation performance: the seller of the option needs to perform the contract when exercising the right, and the buyer can choose whether to exercise the right. This means that the seller may need to provide the basic assets or pay the price difference, and the buyer can choose whether to execute the contract according to the market situation.
Risk-return asymmetry: the buyer of the option obtains the possible high-return opportunity in the future by paying a certain premium, and the potential maximum loss is limited to the paid premium. In contrast, the seller's royalties are limited, but the potential maximum loss is infinite, depending on the changes in the price of the underlying assets.
Generally speaking, there is obvious asymmetry between the rights and obligations of buyers and sellers in financial options trading, which is also the key feature between risk and return in the options market.
Core concept
What are options?
An option is a contract between two trading parties about future trading rights, in which one party has the right to buy or sell an agreed number of underlying securities from the other party at an agreed time and at an agreed price.
What are the underlying assets that options can trade? ?
The underlying asset is the asset corresponding to the option contract, and the buyer and seller of the option agree to buy and sell the underlying asset. A contract is an asset corresponding to a call option or put option. According to the different types of underlying assets, there are two main types of options: financial options and commodity options. Financial options include stock options, ETF options, stock index options, interest rate options and foreign exchange options. At present, the target of the stock option contract launched by the Shanghai Stock Exchange is a single stock and ETF listed and traded on the Shanghai Stock Exchange.
What is a call option? ?
A call option is an option, and the buyer of the option has the right to buy an agreed number of underlying securities from the seller of the option at an agreed time and price. For example, Jincai bought the stock call option of Zhaobao Company at the exercise price of 65,438+05 yuan. When the contract expires, regardless of the market price of the stock, he can buy the stock at the price of 15 yuan per share. Of course, if the market price of the stock falls below 15 yuan per share when the contract expires, you can choose not to buy the stock.
What is a put option? ?
A call option is an option, and the buyer of the option has the right to sell an agreed number of underlying securities to the seller of the option at an agreed time and price. For example, Jincai bought a put option on Zhaobao's stock at an execution price of 65,438+05 yuan. When the contract expires, regardless of the market price of the stock, he can sell the stock at the price of 15 yuan per share. Of course, if the market price of the stock rises above 15 yuan per share when the contract expires, you can choose not to sell the stock.
What is a contract unit? ?
The contract unit is the number of underlying assets corresponding to an option contract, that is, the number of underlying assets that buyers and sellers buy or sell at the agreed price at the agreed time. For example, Jincai holds a call option of Zhaobao Company with the exercise price of 12 yuan, and its contract unit is 1000, that is, it has the right to buy 1000 shares from the seller of the option at the agreed time at the price of 12 yuan.
What is the exercise price? ?
Exercise price, also known as exercise price, final price and exercise price, is the transaction price of the underlying securities stipulated in the option contract when the option buyer exercises. After the price is determined, the option seller must execute the transaction at this price, no matter what level the market price of the underlying asset rises or falls, as long as the option buyer requests to exercise the option. For call options, the buyer has the right to buy the underlying securities from the option seller at the exercise price. For put options, the buyer has the right to sell the underlying securities to the seller at the exercise price.
When is the expiration date? ?
The expiration date is the date when the validity of the contract expires, and it is also the last date when the option buyer can exercise his rights. When the contract expires, it will automatically become invalid, and the option buyer will no longer enjoy the rights and the option seller will no longer assume the obligations. The expiration date of the SSE option contract is also the last trading day, that is, the fourth Wednesday of each contract expiration month (postponed in case of legal holidays), unless otherwise specified.
What is the right to exercise? ?
Exercise means that the option buyer exercises the right to buy or sell an agreed number of underlying assets at an agreed price at the time specified in the option. After the option is exercised, the position will disappear.
When are the exercise date and the exercise settlement date? ?
The exercise date refers to the date when the option buyer can put forward the exercise. Unless otherwise specified, the exercise date of the SSE option contract is also the last trading day. The delivery date of exercise refers to the delivery date of funds or underlying assets after the option buyer puts forward the exercise. The settlement date of the option contract exercise in Shanghai Stock Exchange is the next trading day of the exercise date.
What are real, flat and imaginary options? ?
Real option, also known as in-price option, refers to the state that the exercise price of call option is lower than the market price of the underlying securities, or the exercise price of put option is higher than the market price of the underlying securities. ?
Flat option, also known as flat option, refers to the situation that the exercise price of the option is equal to the market price of the underlying securities.