What are the risks that need to be paid attention to in the process of options trading?

f Options have the characteristics of leverage, nonlinearity and risk asymmetry between the two parties to the transaction, which makes their risk prevention and control different from traditional financial products.

From an investor's point of view, it is necessary to pay attention to the risk management of specific transactions, such as the risk of option contract expiration, the risk of forced liquidation, etc.

1. Contract expiration risk

This is a risk that option buyers need to be particularly aware of.

Generally speaking, ** and ETFs do not have an expiration date, investors can hold them for a long time, and they do not exist"Expired and void"Issue; But options have an expiration date.

Once the expiration date has passed, even options contracts that are beneficial to investors will no longer have any value, and the option buyer may lose all of the premium as well as the possible gains.

Therefore, investors need to pay attention to the expiration date of each option contract and prepare for the option to be closed or exercised.

2. Risk of forced liquidation

Forced liquidation risk, that is, the risk of forced liquidation due to insufficient margin or illegal positions exceeding the limit, is a risk that option sellers need to pay special attention to.

Options trading is similar to ** in that maintenance margin is calculated from the option obligor based on the contract settlement price at the end of each day.

If there are insufficient funds available in the obligor's margin account, the obligor will be required to make a margin call.

If the margin is not made up within the specified time and the position is not closed by itself, the position will be forcibly closed.

In addition, when an investor's position exceeds the limit, he may also be forced to close his position if he or she fails to close the position by himself in accordance with the regulations.

Options are very important basic financial instruments in the modern financial market, which can realize the functions of risk management and income enhancement. At the same time, options are also relatively complex financial instruments with high cognitive costs, which puts forward higher requirements for the professional level of investors.

1. Market risk: Options are affected by market supply and demand, and when the market fluctuates greatly, options may fluctuate sharply, resulting in investors facing market risks. This article ** in ferry: options understand

2. Liquidity risk: Since there are relatively few transactions in the options market, the market liquidity may be insufficient, and investors may encounter difficulties when buying and selling options, resulting in trading risks.

3. Exercise risk: When exercising, investors need to understand the exercise and exercise time, if the exercise is too high or the exercise time is too short, it may lead to losses for investors.

Options investing is a trading instrument with its own leverage, so while maximizing profits, the risks will also increase. Moreover, the asymmetry between risk and return between the two sides of an option contract transaction is a unique risk mechanism in options trading. When an options investor trades, especially when the seller sells to open a position, the risk will be infinitely magnified and must be carried out in a timely manner.

Take various risk prevention measures to take profit and stop loss in time.

There is good news

When there is good news in the market, the underlying asset is usually good. At this point, investors can buy call options for the opportunity to earn income. Conversely, when there is bearish news in the market, the underlying asset is usually the same.

At this point, the investor can buy the put option for the opportunity to earn income.

Big ups and downs**

The rise and fall of options is closely related to the volatility of **. In the event of an obvious rise or fall, the corresponding options market is also prone to unilateral. Investors can respond to a sharp rise in a call contract based on the market, or a put contract to deal with a sharp decline.

In the case of correctly judging the direction of the market, it is expected to make a profit by adding positions at the right time and closing the position at a high level and taking profit.

There are two main types of liquidity risk involved in options trading:One is related to a specific product or market, which can be referred to as market liquidity risk; The other is related to the adequacy of the trader's funds, which can be called liquidity risk.

Market liquidity risk primarily refers to the risk of not being able to open or close a position at a reasonable rate due to a lack of a contract counterparty. There are two reasons for this risk:

1. Due to insufficient market depth and breadth, the entrusted order cannot be executed.

If you can't open a position, it's fine, but if it's a closing order, once you encounter violent market fluctuations, it is difficult to find a counterparty, and you can't stop losses in time, so you can only watch the losses continue to expand, and the market liquidity risk is extremely high.

For example, for investors who hold call rights, when the market may, investors do not want to hold the option to the expiration date and lose all the premium, and hope to close the position as soon as possible, but due to the lack of counterparties in the market, the investor can only sell the call right held at a very low price, and in extreme cases, it cannot be sold before the expiration date, so it can only invalidate the option until the expiration date and lose all the premium.

Second, during the "fast market", because of the rapid changes in the market, the option holder cannot flatten or hedge a specific position at a fixed price, resulting in liquidity risk.

Comparatively speaking, due to the large market size of standardized contracts on the market, traders can decide to cover their positions at any time according to changes in the market environment, and the liquidity risk is small.

In options trading, there is an asymmetry between risk and return. The buyer's biggest loss is the premium, while the seller is very risky, so the exchange only charges the seller a margin.

Risks include interest rate risk, market risk, and credit risk.

1.Prefer deep out-of-the-money and in-the-money options

Like 50 ETF options trading, CSI 300 ETF options also have deep out-of-the-money and deep in-the-money options. Although the premium is low and the leverage is relatively high, the deep out-of-the-money option is cheap and cheap, and the deep out-of-the-money option is gradually sensitive to the change of the target only when its out-of-the-money state changes, and the black swan's ** is rare.

2.There is no such thing as a scientific stop-loss mechanism

We all know that in options trading, the option buyer has unlimited returns and limited risks, but the investment risk in options trading cannot be ignored. Because less can also cause a lot of losses. Therefore, it is very necessary to stop loss.

When you invest, if you encounter a certain loss, it is recommended to close the position immediately and stop loss to reduce your own investment loss.

Secondly, it should be noted that the setting of the stop loss point must be scientific and reasonable, and the stop loss can not be triggered frequently nor set too high. Generally speaking, a loss of more than 10 percent requires immediate play. The specific amount can be adjusted according to the amount of risk tolerance that investors can make.

3.Ignore the loss of time value

CSI 300 ETF options have an expiration time like 50 ETF options, so when choosing a contract, you must pay attention to the expiration time of the contract. As a buyer, you also need to pay attention to the length of the position, as the value of the lost time of a long-term position is very uneconomical. Therefore, it is necessary to choose a contract with a more appropriate expiration time for investment, and the winning rate will be higher.

The risks of options trading mainly include premium risk, market liquidity risk, contract expiration risk, leverage risk, volatility risk, option trading risk, and inability to close the position.

Option is a kind of option, the buyer of the option pays a certain amount of premium to the seller, and then obtains this right, that is, the right to have a certain amount of **** or purchase a certain amount of the underlying within a certain period of time. The rights and obligations of the buyer and the seller in options trading are not equal. After the buyer pays the premium, there is a right to execute and not to execute, but not an obligation; The seller receives the premium, regardless of the unfavorable market conditions, and once the buyer proposes to exercise it, he has no obligation to perform the obligations under the option contract without the right.

There are several main components of options:

1.Execute**. The buyer of an option exercises its right to buy and sell the underlying as prescribed**.

2.Premiums. The option paid by the buyer of the option**, i.e., the fee paid by the buyer to the seller of the option to obtain the option.

3.Performance bonds. The option seller must deposit a financial guarantee on the exchange for performance.

4.Call and put options. A call option refers to the right to buy a certain amount of the underlying asset within the validity period of the option contract according to the exercise**; A put option is the right to sell the underlying asset.

When the option buyer expects that the underlying ** will exceed the exercise**, he will buy the call option and vice versa.

According to my description, do you know what risks there are in options trading?

Legal basis: Article 2 of the ** Law of the People's Republic of China Within the territory of the People's Republic of China, this Law shall apply to the issuance and trading of **, corporate bonds, depositary receipts and other ** recognized in accordance with the law; Where there are no provisions in this Law, the provisions of the Company Law of the People's Republic of China and other laws and administrative regulations shall apply.

This Law shall apply to the listing and trading of **bonds and **investment** shares; Where other laws and administrative regulations provide otherwise, apply those provisions.

The administrative measures for the issuance and trading of asset-backed and asset management products shall be prescribed by the Company in accordance with the principles of this Law.

If the issuance and trading activities outside the territory of the People's Republic of China disrupt the order of the market within the territory of the People's Republic of China and harm the legitimate rights and interests of domestic investors, it shall be dealt with in accordance with the relevant provisions of this Law and legal responsibility shall be investigated.

Options trading has become an extremely popular way of trading in the modern financial market. Whether you're a buyer or a seller of options, volatility is an important factor to judge, with buyers typically following volatile prices and sellers gravitating towards stable stock prices. So what are the precautions for options trading?

How to avoid risks?

What are the precautions for options trading?

Actually, when trading options. Many people overlook some points to be aware of, including the fact that veterans who have been trading for a long time will also make some low-level mistakes. In the options trading market, investors must follow suit.

It is not recommended to chase up and down, but if investors want to do this, it is best to try again after breaking through the range, so that the probability of reversing again in a short period of time is low.

The RSI indicator is an indicator that can help us identify the current market trend, can warn us in advance whether our current trend is over, and if there is a reversal, it will also remind us in the indicator, so we can seize this opportunity to react when the reversal occurs. To become an option seller, a position operation must be made. Since you only need to pay the full margin** and open a position, even if you trade in the right direction throughout the way, insufficient margin can force you into the market due to temporary market volatility.

How to avoid risks in options trading?

In the options trading market, the direction of the market directly affects the profit and loss of investors' transactions, and the risk of market fluctuations is also one of the main risks faced by investors in the options trading market. Many investors think that they can grasp the trend of option investment, and frequent trading, in fact, no, the main advantage of using options for risk control is that the capital is relatively small. Options come with leverage, a small amount of funds can be leveraged more than ten times or even dozens of times the underlying matter, which is much lower than the cost of direct spot goods.

Options are risk-based financial derivatives, which have characteristic advantages and risks.

1.An option is also a contract between the two parties to buy and sell rights in the future, and the buyer of the option, that is, the right party, obtains the right by paying a certain fee, that is, the business party, that is, the right to obtain the right. You can sell a certain amount of ** or ETF to the seller at an agreed ** in the future, and of course you can also waive this right, and you must cooperate in exercising your rights.

It is characterized by the ability to achieve intraday trading and the ability to be bearish

2.Both parties to an option transaction have different risk profiles and are exposed to the risk of unfavorable premiums. This is similar to **, and if you buy low and sell high, you can make a profit by closing the position, otherwise this loss.

However, the risk is lower, and the risk of the option is controlled within the premium range, and the position will be risky. However, for the buyer of the option, although the loss is 100%, there is a risk that the seller will have a large change when he gets the premium. Therefore, for option investment, we must fully understand the risks, learn more about its relevant trading knowledge and understand the volatility of the market when trading.

The risk is that the buyer will lose the cost of the royalty invested, and the seller is at risk of liquidation.

The risks of trading commodity options are:

Clause. 1. The risk of price limit differences.

Clause. 2. Risks of deep out-of-the-money options trading. Deep OTM options** are cheap, but if you buy them in large quantities, if the option expires, it may cause a significant discount on the deep OTM option you have purchased**.

Clause. 3. Option liquidity risk. In options, deep out-of-the-money and deep in-the-money options tend to have poor liquidity.

Clause. Fourth, the risk of losing money in the right direction. For options, in addition to the trend of the underlying **, there are also volatility, expiration time, etc., so there may be a situation where investors look in the right direction, but the option loses money.

Article 27 of the Regulations on the Administration of Transactions stipulates that the exchange shall promptly announce the trading volume, transaction price, open interest, minimum and lowest price, opening price and ** price of the listed varieties of contracts and other real-time prices that should be announced;

And to ensure that the real-time** is true and accurate. Exchanges are not allowed to publish information. Without the permission of the Exchange, no unit or individual may issue a transaction instant.