What are the basic risks of options trading?

First, the ** of premium risk options is premium. Both buyers and sellers are exposed to the risk of adverse changes in royalties, which is the same as doing **, buy low and sell high, and close the position to make a profit; Instead, it loses money. Unlike **, the option buyer's risk floor has been determined and paid.

Second, market liquidity risk. Market liquidity risk mainly refers to the inability to hedge and close positions with a reasonable ** due to insufficient market depth and breadth. Even if there is a loss, it is impossible to stop the loss in time, and the loss continues to expand.

Options trading contracts can be divided into a call option and a put option, as well as different expiration months and different exercises for businesses**. There are a large number of 50ETF options contracts and there is a problem of inactive trading.

Third, the risk of change. Options are a type of financial derivative with complex leverage. There are many factors that affect the options market, including teaching objectives, exercise, remaining labor time, volatility, risk-free rate, dividend yield, etc.

The above analysis of the fluctuation of factors affecting the pricing of corporate options will bring the risk of volatility of options**. Options investors need to assess and manage** volatility risk through Greek values, situation analysis, and stress testing.

Fourth, the risk of maturity investment in the contract. As well as options have an expiration date, the contract for the current month is on the fourth Wednesday of the month. The option buyer (the right party) should be prepared to apply for the exercise of the option, and the option seller (the obligated party) should be prepared to perform the obligation.

There is an element of the corresponding contract, the expiration date of the option contract.

As the literal meaning of the word, the expiration date refers to the date of expiration of the validity period of the option contract, and is the final completion date for the option holder to exercise his or her national rights. Option contracts have a limited life cycle. When investors trade options, another corporate risk of option investment – the risk of maturing debt.

What is the expiration risk faced by investors as an option right or obligation?

For example, for the owner of a 50 ETF option, the time value of the option will gradually decrease as the expiration date of the contract approaches. As the expiration date approaches, the entitled party will lose all royalties.

Investor development requires us to recognize that the right holder of an option has a right, but this right has a term. It doesn't help if the market volatility doesn't meet expectations within the stipulated period (e.g. the current price of a 50 ETF** fails to rise above the exercise of a call option**).

Option trading is actually a kind of right trading, that is, the buyer and seller of a certain option can buy and sell a certain amount of a certain amount of an option at any time within the specified period of time, regardless of the rise and fall of the market.

Generally speaking, the basic risks of options trading can be divided into market risk, liquidity risk, operational risk, etc. I think you can basically understand what these big concepts mean by listening to the name, so there is no need to elaborate on them. In detail, let's talk about some more practical precautions in options trading, which is more conducive to risk control.

1. Options have leverage attributes, and they are T+0 transactions, so the volatility is very large, unless you have a great grasp, don't easily trade naked options, it's best to invest in a combination.

2. If you sell options, you need to pay margin, and when the market develops in an unfavorable direction, you need to pay attention to the margin to avoid losses caused by forced liquidation.

3. Although the risk of buying options is limited, the maximum loss is that there is no return and no money left, which is different from **, so when holding the right position, if the situation is unfavorable, it is necessary to close the position in time to control the loss.

4. Pay attention to the exercise date, the expiration date should be exercised or closed, otherwise the option will expire and be invalidated, and the money will be lost in vain. Of course, many brokerage firms' software can realize automatic exercise, and this function is best opened.

5. Pay attention to the calculation when exercising the right to avoid default due to insufficient money or coupons. SSE ETF50 option call option exercise, T+2 day** arrives, there is a time difference in the trading day, if the underlying ** fluctuates in an unfavorable direction on T 1 day, you need to bear the loss.

6. The above risk precautions are for on-site options, if you participate in over-the-counter options, the most important thing is credit risk, if the platform or counterparty is discredited, it will be a big loss. There is also liquidity risk, and options may not be able to close when you want to close the position. OTC options are very risky, and you must be cautious when participating.

On the last trading day of options trading, as the right party of the option, what risks need to be paid attention to when exercising and delivering?

First, the exercise failure due to insufficient funds or insufficient balance of the option.

If an investor holds an ETF call option with an exercise price of RMB (contract multiplier of 10,000) to the expiration date, and the ETF ** is RMB, and the investor chooses to exercise the option, then he needs to spend RMB 10,000 to buy 10,000 shares of the ETF.

When an investor issues an exercise order, the system will automatically freeze the exercise funds of 10,000 yuan, and if the customer's account funds are less than 10,000 yuan, it will lead to the failure of the exercise. <>

Similarly, if an investor holds a put option on an ETF with an exercise price of $10,000 until the expiration date, the ETF's market** is $10,000 and the investor chooses to exercise it. If the number of ETFs in the account is insufficient, it will also result in an unsuccessful exercise. Therefore, investors who intend to exercise their options must prepare sufficient money or bonds in advance.

Second, it faces the risk of fluctuation of the underlying subject.

Even if the right holder of the in-the-money option is successfully exercised, the right party of the call option will face the risk of fluctuation of the underlying ** due to the delivery of the underlying ** on T+1 day and the sale on T+2 day.

The right holder of the in-the-money call option will receive 10,000 ETF at the end of T+1 day after successfully exercising the option on T day, and if the **** of the ETF on T+1 day has become yuan, then the investor's actual cashable profit at this time has been reduced from 3,000 yuan to 2,000 yuan.

That is to say, if the target **** is large on T+1 day, the right party exercising the call option may incur a certain loss. Therefore, exercising an in-the-money option does not necessarily "make money".

Before making a decision to exercise the option, investors also need to carefully analyze it, and if they think that there may be a large increase in the number of days between T+2, they can also choose not to exercise the option.

Third, miss the exercise day.

At present, the ** options in the simulated trading of the Shanghai Stock Exchange are European-style options, and the exercise date is only one day on the last trading day.

Giving up a valuable "right" is bound to bring certain losses to investors. Therefore, for the position of the right party of the in-the-money option, the investor should either exercise the option or close the position and sell, and do not let it become a piece of waste paper due to his own negligence.

In addition to the risk of exercise and delivery, there may also be high premium risk and liquidity risk in option investment, and investors should fully understand the options and the various risks of option investment before making prudent investment decisions.

High premium risk: i.e., when the option is significantly higher than the fair value, there may be a high premium risk.

Liquidity risk: i.e., the inability to close positions in a timely manner when the liquidity of an option contract is insufficient or suspended, especially for options contracts that are deeply in-the-money or out-of-the-money.

Options trading. The basic risks mainly include leverage risk, volatility risk, inability to close the position, risk of contract expiration rights invalidation, option trading suspension risk, etc.

Caishun Options: What are the basic risks of options trading? Whether it is a ** or an option contract, there is an expiration date, and each ** option contract corresponds to the corresponding contract elements, and the expiration date of the option contract is one of them, so what are the risks of the expiration date of the option contract?

How to protect against the risk of option expiration?

What are the risks of an option contract expiry? Option contracts have the characteristics of a limited life cycle, and investors are also faced with another risk of option investment when trading options - expiration risk, which mainly stems from liquidity risk and time value zero risk.

The loss of the time value of an option is impossible to completely avoid, because time is always passing. What we can do is try to avoid the loss of time value. As the expiration date of the option contract approaches, the time value of the option decreases at an accelerated rate.

For the buyer of the option (i.e., the right party), the value of the out-of-the-money and flat-the-money options held in hand will gradually go to zero.

The expiration risk of options mainly stems from liquidity risk, when the expiration is approaching, the liquidity of the option contract is insufficient, and the market liquidity risk mainly refers to the risk that the position cannot be established or closed with a reasonable ** due to the lack of contract counterparties, especially the deep out-of-the-money option contract, and the buyer of the option is very likely to lose all the premium.

How to protect against the risk of option expiration? When investing in options, investors should understand their own risk tolerance, avoid taking excessive risks, and choose a trading strategy according to their own circumstances. In trading, keep in mind that:

First, do not increase your position, and reasonably set the take-profit and stop-loss points; Second, you can't be too greedy when it's good; Third, don't take orders against the trend when it's bad, so you still have to do a good job of risk management and control in options trading.

In addition to directional risk, when ** fluctuates violently, GAMMA will make your **exposure increase rapidly, and the volatility will also rise and fall rapidly, which will also make the net value of the position change rapidly. In addition, when the expiration is about to expire, the time value loss speed accelerates, and the exercise price of the seller** held on the expiration date is very close to the spot**, so there is a pin risk. Many investors do not understand a variety of reasons, which make the profit and loss of options faster, which is better than any other variety, and this is also its charm.

**Option means that the buyer acquires the right to sell a certain amount of the relevant amount at the agreed price on or before the expiration date specified in the contract after the payment of the option premium. It is one of the many ways to motivate employees and falls under the category of long-term motivation.

**Option is the right of a listed company to give the senior management and technical backbone of the enterprise a certain period of time to purchase the company's common shares in a pre-agreed **.

**Option is a new incentive mechanism different from employee stocks, which can effectively combine the senior talents of the enterprise with their own interests.

**The exercise of an option increases the ownership equity of the company. It is the holder who buys the outstanding shares from the company, i.e., directly from the company and not from the secondary market.

Strategy Bar**Allocation:**Option Risk.

As a risk management tool, options are equivalent to insurance against the underlying asset held by the investor. For example, if you are now holding company A, although the situation is not bad, but you are worried about the stock price and causing losses, you can use put options to insure yourself. This is equivalent to paying a premium, and obtaining the right to sell Company A in the future with the agreed **, if the stock price ** in the future, you can still sell ** according to the original agreement, avoiding the risk of stock price**.

It is worth noting that options trading also carries specific risks such as leverage risk, volatility risk, etc.

1. Leverage risk, ** Options trading adopts the method of margin trading, and investors' losses and gains may be multiplied, especially the total losses faced by investors who sell open options may exceed all the initial margin and additional margin they pay, which has leverage risk.

2. Volatility risk: When investors participate in options trading, the volatility of the spot market, the volatility of options and other market risks may cause losses.

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.