First, the contractual factors of options trading
1. Buyer or investor (receiver): refers to the party who purchases the option or the party who purchases the right.
2. Seller: refers to the party selling the right;
3. Premium: refers to the expenses paid by the buyer to the seller for the right to purchase, also called insurance premium. Option premium is of great significance; One is that the maximum loss that the option buyer may suffer is controlled within the option fee, and the other is that the option seller can get the option fee income immediately when selling the option. The loss of the buyer or the profit of the seller shall be subject to the option fee and shall not exceed.
4. Transaction price: refers to the transaction price of forward commodities agreed by buyers and sellers, also called base price or contract price.
5. Date of declaration: When the option buyer requests to deliver or deliver the commodity contract, it must notify the seller on the predetermined delivery date or a day before the delivery date, that is, the "notification date" or "declaration date".
6. Maturity date: refers to the pre-determined delivery date or delivery date, before which the pre-declared option contract must be fulfilled, and this date is the end of the validity period of the option contract. This day is also called "Performance Day".
The contract elements of options trading in financial markets are the same as above, but the "commodities" here are only financial commodities.
Second, the option component:
(1) execution price (also called performance price). The buying and selling price of the subject matter specified in advance when the buyer of the option exercises his rights.
(2) royalties. Option price paid by the option buyer, that is, the fee paid by the buyer to the option seller for obtaining the option.
(3) Performance bond. The option seller must deposit the performance bond in the exchange.
(4) Call options and put options. Call option refers to the right to buy a certain number of subject matter at the execution price within the validity period of the option contract; Put option refers to the right to sell the subject matter. When the option buyer expects the target price to exceed the strike price, he will buy a call option, and vice versa.
3. At present, there is no open option and no real option exchange in China. But ordinary people can invest in options through two channels.
1, bank channel, banks can buy and sell options. Banks such as China Merchants Bank, Bank of Communications and Minsheng Bank all have options trading.
2. Foreign channels: options can be traded through some foreign options trading platforms.
Fourth, trading options.
1, transaction definition
In the process of foreign exchange trading, both parties have the right to choose to buy or sell a foreign exchange at the agreed exchange rate in the future.
2. Advantages of trading
Option trading makes up for the defect that forward trading only protects the present value but not the future value. It has great flexibility. For contract holders, when the exchange rate is favorable to them, they will take non-delivery measures to make their exchange rate risk loss less than or equal to the insurance premium.
(1) option is an effective risk management tool. Options are based on futures contracts and can be said to be derivatives of derivatives. Therefore, options can be used to protect the value of spot and futures transactions. By buying options, you can protect the value of spot or futures without the risk of extra margin. By selling options, you can reduce the cost of holding positions or increase the income of holding positions. The comprehensive application of different exercise prices and different maturity rights makes it possible to provide tailor-made hedging strategies for hedgers with different preferences.
(b) Options provide investors with more investment opportunities and investment strategies. In futures trading, only when the price changes directionally can the market have investment opportunities. If the price is in a consolidation period with less fluctuation, the market lacks investment opportunities. In option trading, whether the futures price is in a bull market, a bear market or a consolidation, it can provide investors with opportunities to make profits. Futures trading can only be based on orientation. The trading strategy of options can be based on the changing direction and fluctuation of futures prices. When investors focus on multiple fluctuations, they can buy trading portfolios such as stride and stride. On the contrary, if investors are bearish on volatility, they can do the opposite of the above strategy.
(3) lever. Options can provide investors with greater leverage. Especially short-term hypothetical options. Compared with the futures margin, the same number of contracts can be controlled with less use fees. Let's take flat options as an example and compare them with futures.
Four. major feature
(A) a unique profit and loss structure
Compared with investment tools such as stocks and futures, the nonlinear profit and loss structure of options is different.
For futures bulls with a cost of 1800 yuan/ton, the position loss will increase by one yuan for every price increase and decrease. For short futures positions, the opposite is true.
Profit and loss 1800 The profit and loss chart of futures positions with a futures price is a long and bullish profit and loss chart with an exercise price of 1800 yuan. Its maturity profit and loss chart is a broken line rather than a straight line, and there is an angle where the price is executed. If the futures price is lower than the option strike price, the call option is in a virtual state and has no value at maturity. The option buyer will lose all the premium 20 yuan, but no matter how deep the futures price falls, the loss of the option buyer will not increase; If the price of the expired futures is 1820 yuan, then the call option is in a breakeven state; If the futures price is higher than the exercise price of options, the nature of call options and futures bulls is the same at this time, and the relationship between the gains and losses of call options and the changes of futures prices begins to change in the same direction.
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.
(B) the risk of options trading
In option trading, the rights and obligations of buyers and sellers are different, which makes them face different risk situations. For option traders, both buyers and sellers are faced with the risk of adverse changes in royalties. This is the same as futures, that is, within the scope of commission, buy low and sell high, and you can make a profit by closing your position. On the other hand, it is a loss. Different from futures, the risk bottom line of option bulls has been determined and paid, and its risk is controlled within the premium range. The risk of option short position is the same as that of future positions. Because the premium received by the option seller can provide corresponding guarantee, it can offset some losses of the option seller when the price changes adversely.
Although the risk of the option buyer is limited, its loss ratio may be 100%, and the limited losses add up to greater losses. Option sellers can get royalties. Once the price changes adversely or the volatility rises sharply, although the futures price cannot fall to zero or rise indefinitely, from the perspective of fund management, the loss at this time is equivalent to "infinity" for many traders. Therefore, investors must fully and objectively understand the risks of option trading before investing in options.