What are options used for? What are options?

On February 9, 2015, SSE 50 ETF options were listed on the Shanghai ** Stock Exchange.

It is the first on-exchange option variety in China. This not only announces the arrival of the era of China's options, but also means that China has a full set of mainstream financial derivatives.

1. Options can be hedgedMarket Risk

Many investors like to hold some ** for a long time, but are afraid of the stock price**, so investors can put options.

to hedge against downside risks in the market.

For investors who hold the target ** and have accumulated a certain amount of profits, if they have an unclear view of the market outlook and are worried about the stock price, but sell ** and worry that the stock price will continue to lose the opportunity to obtain higher returns, investors have two countermeasures at this time:

1) If the investor needs to cash out the hand, he can sell the option and call the option at the same time;

2) If the position is large and the cost of selling ** impact is high, you can put the **** option in the opponent to lock in profits.

2. Options can be effectively masteredRisk control

The non-linear characteristics of option risk and return theoretically ensure that the return of ** option is infinite and the risk is relatively limited, although the winning rate of the buyer of the option is low, but each loss is limited to the option handling fee, which is also an undoubted fact.

3. Options can increase potential returns

When doing money management, we generally set positions with losses, if the unit risk is relatively large, it will correspondingly reduce our **, which also reduces our potential income space, if we use options to achieve this strategy, because the maximum loss is limited to the option premium, correspondingly** can be opened more sufficiently, and the potential income is relatively large.

4. Analysis of options trading strategies

From the perspective of trading profits, we feel that ** options and ** trading are very similar.

We know that ** is a certificate of earnings that represents the ownership of the company.

But **itself has its own transactions**, not that the company's profitability is very strong, and **** can make money at any time, it has a valuation problem, and we generally use the price-earnings ratio.

Or the price-to-book ratio.

to judge the level of valuation.

Similarly, there is also a problem of high and low valuation of options, **the timing is not appropriate, ** overvalued options, that is, the premium is too high, and it should be normal to lose money.

For example, a call option is an out-of-the-money contract, even if the underlying asset goes in the direction we bought, we may lose money, because the volatility of the underlying asset is too small to "pry" the option towards.

Therefore, the best options trading strategy is the right option. There is only a premium rate.

A low-priced, low-premium double-low option contract is the most suitable.

An option is a contract that originated in the American and European markets in the late eighteenth century that gives the holder the right to buy or sell an asset at a fixed rate at a specific date or at any time prior to that date.

For example, the company promises you in the option contract that two years later, you can subscribe to the company's ** within 1000 shares with 1 yuan and 1 share, then the time of these two years is the period of the option, and the right to subscribe to the company with 1 yuan and 1 share is the right to the option, which is the option.

An option is a contract that originated in the American and European markets in the late eighteenth century that gives the holder the right to buy or sell an asset at a fixed rate at a specific date or at any time prior to that date. The main points of the definition of options are as follows:

1. Options are a right. An option contract involves at least two parties: the buyer and the **person. The holder has rights but not obligations.

2. The underlying of the option. The underlying of an option refers to the asset that you choose to buy or **. It includes, bonds, currencies, indices, commodities, etc.

Options are "derived" from these underlying assets, hence the term derivative financial instruments. It is important to note that the option holder does not necessarily own the underlying asset. Options can be "short-sold".

Option buyers don't necessarily really want to buy the underlying asset. Therefore, when the option expires, the two parties do not necessarily carry out the physical delivery of the underlying asset, but only need to make up the price according to the price difference.

3. Expiration date. The day on which the option expires agreed upon by the parties is called the "expiration date", and if the option can only be exercised on the expiration date, it is called a European-style option; If the option can be exercised at any time before the expiration date, it is called an American-style option.

4. Exercise of options. The act of buying or selling an underlying asset under an option contract is called "execution". The fixed ** agreed in the option contract on the basis of which the option holder buys or sells the underlying asset is called "execution**".

Hello, an option, also known as an "option", refers to the right of its holder to purchase or a certain number of underlying instruments within a specified period of time as agreed by both parties to the transaction. Options trading is all about buying and selling such options.

Options trading is actually a unilateral transfer of rights for compensation. The buyer of the option has this right at the cost of paying a certain amount of premium, but does not assume the obligation to buy or sell; After receiving a certain amount of premium, the seller of the option must unconditionally obey the buyer's choice and fulfill the promise made at the time of the transaction within a certain period of time.

Uses of Options:

1.Hedging risk: Options are a tool that can be used to hedge market risk. Investors can use the arbitrage strategy of options to balance the risk in their portfolios while buying or selling options.

2.Yield protection: Options can be used to protect the value of your holdings** or other portfolios, especially when the market is volatile. For example, a ticket investor can buy a put option to protect its loss when its value is in the market.

3.Achieve leverage: Options allow investors to gain control of a large amount of assets with a small amount of capital, thereby achieving leverage. For example, buying a call option allows the investor to control more with a relatively low price.

4.Earn income: Investors who hold options can earn premium income by giving option contracts** to other investors.

For discovery: Changes in options can reflect the market's expectation of changes in the underlying asset, so options can be used for discovery and market. Information source: Option sauce.

To open up investment channels for investors, expand the range of investment options, adapt to the needs of investors for diversified investment motives, transaction motives and interests, and generally provide investors with the possibility of obtaining higher returns.

If there is an option, there will be an option, and the ** of the option is usually called the "premium" or "option premium". The premium is the only variable in the option contract, and other elements on the option contract, such as: execution**, contract expiration date, trading variety, transaction amount, trading time, trading location and other elements are predetermined in the contract and are standardized, while the ** of the option is obtained by the trader bidding on the exchange.

Options, in simple terms, are the money you need to pay to buy something in the future now. For example, if a piece of sugar is 1 yuan now, and you think that the price will increase in the future, you place an order to sell a candy for 2 yuan after a month, for example, if it is really 2 yuan after a month, you will deliver it and earn 1 yuan; If you run out of candy by then, you can choose to deliver it or not. The buyer of the option has the right to deliver or not to deliver.

The function of options is very comprehensive, in addition to the above-mentioned economic functions on the macro level, there are also real insurance, leverage, enhanced returns, three-dimensional trading, precision investment and other functions for each investor.

1. The risk shifts

The most basic and important function of an option is the insurance function of the target. For example, when an investor holds the underlying ** and is worried about the loss caused by the stock price**, he can **put the option to insure to lock in the lowest selling price in the future. When the stock price is **, investors can make up for the loss of **** through the income brought by the buy put option contract**.

In addition, in the case that China's ** trading cannot be T+0, the launch of 50ETF options can be T+0, and investors can call put options and then sell call put options from time to time during the trading period according to market fluctuations, so as to obtain fluctuating range returns.

2. Do big things with little money

At the end of 2012, the financial predator Soros's quantum ** used about 30 million US dollars, ** bullish US dollar, bearish yen foreign exchange options, profit of 1 billion US dollars, equivalent to more than 30 times the capital, Soros is through full fundamental analysis, that the most radical monetary policy will make the yen into a sharp decline, the expiration of the exercise will bring huge returns, so the use of little capital leverage long dollar, short yen, to small broad, to achieve "spend a small amount of money to do big things" effect.

3. Borrow the wind to make force

The so-called use of options to leverage the wind means that investors can use the power of options to sell call options during the holding period to enhance the income of holding shares.

In fact, you can imagine the act of selling and subscribing to a house for rent. For homeowners, it is better to be idle than to make money, and it is common to rent out their homes when prices are tepid, earning monthly rent (like a royalty on an option) to increase their income.

4. Three-dimensional operations

In the market, we all know that only when the stock price is ** to make money, if the stock price **, we can only short positions at most, and we can't make a profit. And the launch of options, if the direction is correct, we can not only make money when the market is ** (long), but also make a profit when the market ** (short). It's like a car can move forward or backward, forming a two-dimensional trading market.

An option is a financial derivative that refers to the right to buy or sell an underlying asset at a specific point in the future. The two parties to an option transaction are the option holder and the option issuer, the holder has the right but not the obligation to execute the option contract, and the issuer has the obligation to execute the option contract.

Options generally contain the following main contents:

1.Underlying Assets: The underlying assets of an option can be financial or non-financial assets such as **, commodities, and currencies.

2.Exercise**: The option contract stipulates that the underlying asset is sold, also known as the strike price or strike price.

4.Premiums and margins: The premiums that the holder needs to pay when purchasing an option is the margin paid by the buyer to the seller, and at the same time, the margin that the issuer needs to pay when issuing the option to bear the corresponding risk.

5.Contract type: Options can be divided into call options and put options, call options refer to when the underlying asset ** is higher than the exercise ** on the expiration date, the holder can purchase the underlying asset with exercise ** as agreed; A put option means that on the expiration date, if the underlying asset ** is lower than the exercise**, the holder can sell the underlying asset with the exercise ** as agreed.

As an important financial tool, options can be used for risk hedging, speculation and the realization of trading strategies and other financial trading activities.

"192 times in 1 day, 10,000 in 1 day to 1.92 million", it has risen to an incredible level, this product is an option. So, what does an option mean? Why is it so popular, let's talk about it below.

What does option mean?

An option is the right to sell a certain quantity of a particular commodity at a specific time in the future. For the option party, it is a "right" that can be exercised or not exercised.

For example, Xiao Ming is in the rice business, worried about the **** of rice in the future, and the purchase cost will increase, so he signed a contract with ** businessman, paid a deposit of 10 yuan, and agreed to **** rice of 100 yuan after 1 month.

Wait until a month later, if the market price of rice rises to 200 yuan, then Xiao Ming will take a contract to the ** businessman, and he may make a lot of money with 100 yuan of **** rice! If, after a month, the market price of rice falls to 50 yuan, then Xiao Ming can choose not to buy rice, but lose 10 yuan in deposit. For those who do business, options can be used to protect against the risk of commodity volatility.

In this example, rice is the "underlying asset" in the option transaction, Xiao Ming is the ** side of the option, ** Shang is the seller, the deposit of 10 yuan is the "premium", and the ** agreed 100 yuan is "execution**".

The underlying assets of options include many financial products, such as bonds, commodities, foreign exchange, indices, contracts, etc. The protagonist of the news that soared 192 times in one day is the SSE 50 ETF option, which is the option of "SSE 50 ETF Index**" as the underlying asset, and the specific investment product is the "50ETF buy February 2800" option.

50ETF means SSE 50 ETF**, "Buy" means call options and call options, "February" means that the fourth Wednesday (27th) in February is the exercise date, and "2800" means that the exercise price is RMB.

The meaning of this option is that the buyer and seller sign a contract and agree that after February 27, they can use the **** SSE 50 ETF of yuan. If the price exceeds RMB, then the party of the option can make a profit, and the option can be exercised according to the contract. Otherwise, there is no need to exercise the right and lose a premium.

Okay, that's all for options. It should be noted that options are high-risk investments, and the transaction threshold is very high, you need to open an account for 6 months, account assets of more than 500,000 yuan, and meet 10 simulated options transactions, plus take the exam, before trading can be allowed. The money-making effect in the above example is also a small probability event, so investors who have not entered the market must pay attention to the risks and have a sense of awe of the market.

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