SSE 50ETF option contract specification
Speaking of option exercise, the following is a sequencing process:
Step 1: Judge whether to exercise rights.
-The option buyer needs to judge whether to exercise before the option expires.
-Generally, the declaration of exercising rights needs to be submitted before the afternoon of the due date 15:30.
-The seller will know whether it has been distributed that evening.
Step 2: Exercise preparation
-Both buyers and sellers need to be prepared for cash on delivery.
-For call options, the buyer needs to prepare funds on the exercise date, and the seller needs to prepare the underlying assets on the next trading day.
-For put options, the buyer needs to prepare the underlying assets on the exercise date, and the seller needs to prepare funds on the next trading day.
Step 3: Deliver money and coupons
-On the next trading day of the exercise date, China Clearing will deliver the funds and the underlying assets.
Or choose to give up the right to exercise:
-If the underlying asset price does not meet the exercise conditions, investors can choose to give up the exercise or close their positions before the expiration date.
Or choose to close the position in advance:
-Option holders can close their positions in advance before the option expires, so as to cash out part of the premium and reduce potential losses.
-For real options, it is necessary to consider whether the exercise is cost-effective. The exercise cannot be delivered to the spot on the same day, but it will take t+2 trading days to arrive. Need to consider whether the underlying assets of the day can still bring benefits.
-For hypothetical options, it is usually more inclined to close positions in advance to avoid the loss of time value.
Finally, most traders who invest in options do not really exercise their rights to buy assets, but close their positions in the current month by closing their positions. Because exercise also involves the cost of exercise expenses, most people will choose the fastest liquidation method.