Options by fdjerue7eeu

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									Options
Option option is available in the future sale of the power of a period of time, bought
the seller pays a certain amount (ie royalties) have in the future after a period of time
(referring to American option) or a specific future date (refer to Continental options)
to a predetermined good price (the strike price means) to the seller to buy or sell a
certain number of specific subject matter of power, but must live with the obligation
to buy or sell.
In fact this is the right option trading transactions. The buyer has the right to have
non- implementation of the rights and duties, completely flexible options. OTC
options and options sub- floor option. OTC options transactions are generally reached
by the transaction both parties.
Option (Option), it is produced in the futures on the basis of a financial instrument. Its
essence, the option is essentially the power in the financial sector and obligations will
be priced separately, so the power of the assignee in a specified time as to whether the
transaction, the exercise of its powers and obligations of parties to fulfill. In options
trading, the purchase of options and some party called the buyer, the sale is called a
seller about the party; buyer or transferee of power, but the seller must fulfill the
obligations of the buyer to exercise the power of people. Specific pricing in the
financial engineering in a more comprehensive study.
Commercial Press, "Dictionary of Chinese investments in
securities," explained: Option English: option; option contract. Also for:
options contracts. Option to exercise financial derivatives as a variety of transactions.
Refers to a specific price within a specified time sale of a certain number of
transactions the right varieties. Contracts to buy or holder (holder) to cover the margin
- premium (option premium) to have the right approach; contract to sell or stand by
power (writer) charged premium, the hope of buying the right lines, must fulfill their
obligations. Options trading for the investment behavior of aid. When investors
optimistic and will hold a call option (call), and when he will hold when the market
outlook bearish put option (put). Option trading is risky if the market contracts in the
opposite direction towards the development could give investors a great loss. Most
species of the actual operation before the expiration of the contract have been
liquidated in.
There are several options following components: ① the exercise price (called strike
price, strike price〕. The exercise of the option buyer the right to object when the
predetermined sale price. ② royalty. Option of the buyer to pay the option price, that
buyer For options and costs paid to seller. ③ performance bond. option seller must
be deposited in exchange for the performance of financial security, ④ call and put
options. call option, is the life of the option contract to buy by the Executive price the
right number of subject matter; put option, is to sell the rights of the subject matter.
When the underlying price of the option buyer is expected to exceed the exercise price,
he would buy a call option, the opposite would be to buy put options.
Option contracts are included in each of four specific projects: the underlying asset,
the option exercise price, quantity, and exercise time.
Underlying asset (Underlying Assets)
Each option has an underlying asset, the underlying asset can be the total number of
financial products of any kind, such as common stock, stock index, futures contract,
bonds, foreign exchange and so on. Typically, the underlying assets of stock options
as stock options, and so on. Therefore, the options are stock options, stock index
options, foreign exchange options, interest rate options, futures and options, they are
usually in stock and options exchanges, futures exchanges traded, of course, there are
OTC.
The option exercise price (Strike Price or Exercise Price)
When in the exercise of options for the sale of the underlying asset price. In most
transactions, options, the underlying asset price close to the option exercise price.
Exercise price of options contracts are clearly defined, usually by the Exchange
according to certain standards in order to reduce the increase given in the form, so the
same options on the subject of a number of different prices. In general, the beginning
of a transaction options, each option will follow a certain distance are a few different
exercise price, and then changes in a timely manner to increase the underlying asset.
As the number of each type of option exercise price, depending on the underlying
asset price fluctuations. Investors trade options, the exercise price options on the
general principle is: Select the underlying asset price in the vicinity of the
implementation of active trading prices.
Number (Quantity)
Options contracts specified the contract holder the right to buy or sell the underlying
asset number. For example, a standard option Geyue The number of traded shares of
100 shares, but in some exchanges there are some exceptions, such as the Hong Kong
exchange-traded options contracts, the number of shares of its underlying stock equal
to Gai's trading volume for each hand.
Exercise time (maturity) (Expiration date or Expiry date)
Each has a valid exercise of the option period, if more than this period, options
contracts expire. In general, the exercise of the option period one and three, six, nine
months, individual stock options contracts in force as many as about nine months.
OTC options, expiration dates tailored according to the needs of buyers and sellers. In
options trading premises, any one stock to be included in a specific effective period,
effective this cycle can be divided into several: ① in January, April, July and
October; ② in February, May, 8 month and in November; ③ March, June,
September and December. They are known as the January cycle, in February and
March period cycle.
Execution time according to the different options can be divided into two kinds of
European options and American options. European option, is only the expiration date
of the implementation of the option was allowed to it in most of the OTC was used.
American option, is the period after the transaction can be executed any day option,
mostly used inside transactions.
For example:
(1) call: Jan. 1, the underlying copper futures, it's exercise price is 1850
U.S. dollars / ton. A purchase of this right, to pay 5 dollars; B sold the rights, income
five U.S. dollars. February 1, copper futures prices rose to 1,905 U.S. dollars / ton, the
price of call options rose to 55 U.S. dollars. A strength of two strategies:
11 A shall be entitled to exercise the right to 1 850 U.S. dollars / ton bid price of
copper futures from the hands of B; B in A to exercise the option to raise this request,
must be met, even if B did not have a copper, only to 1905 U.S. dollars / ton price in
the futures market to buy and to 1,850 U.S. dollars / ton of implementation of the
price sold to A, and A can be 1905 U.S. dollars / ton price in the field of money dished
out, a profit of 50 USD / tonne (1 905 a 1850 1 5). B the loss of 50 U.S. dollars / ton
(1850 a 1905 +5).
11 A can sell the rights sold for 55 dollars a call option, A profit of 50 U.S. dollars /
ton (55 1 5).
If copper prices fell, the copper futures price below the strike price 1850 U.S. dollars /
ton, A will give up this right, only the loss of five U.S. dollars premium, B is net five
U.S. dollars.
(2) put option: l 1st, the implementation of copper futures prices for 1750 U.S. dollars
/ ton, A purchase of this right. To pay 5 dollars; B sold the rights, income five U.S.
dollars. February 1, copper prices fell to 1,695 U.S. dollars / ton, the price of put
options rose to 55 U.S. dollars / ton. At this point, A can take two strategies:
A can exercise their rights on January 11 by 1695 U.S. dollars / ton in the price of
copper from the market to buy, and to 1 750 USD / ton price to sell B, B must accept,
A profit from 50 U.S. dollars / ton (1750 1 1695 1 5), B lost 50 U.S. dollars / ton.
11 A right sold sold for 55 dollars you can put option. A profit of 50 U.S. dollars / ton
(55 1 5〕.
If the price of copper futures rose, A loss would give up that right 5 dollars / ton, B is
a net gain of five U.S. dollars / ton.
Through the above example, the following conclusions can be drawn: First, as the
option buyer (whether call or put options), only the right but not the obligation. His
risk is limited (maximum loss of royalties), but profit is theoretically unlimited.
Second, as the option seller (either call or put options), only the right but not the
obligation, in theory, his risk is unlimited, but the gains were limited (maximum
premium income). Third, option buyers do not pay a deposit, the seller must pay the
deposit as a guarantee to fulfill the financial obligations.
Option is to adapt the international financial institutions and enterprises to control
risks, the costs need to lock the emergence of an important hedge derivative
instruments, the 1997 Nobel Economics Prize awarded to the option pricing formula
(Black - Scholes formula ) of the inventor, which also shows the international
economic circles for the option of attention.
Special Options
Path related options
Standard European option income depends only on the final day of the original due
date in asset prices. The path-related options (path-dependent option) is the ultimate
gain and the entire life of the option of primary asset price changes are related to a
particular option.
In accordance with its final earnings for the native path of Yilai asset prices to a
degree related to options the path into two categories: one is the ultimate beneficiary
and the assets in the period of Nei original p rice Shifoudadao Mouge Huo Ji Ge
agreed level of relevant, Chen Wei weak path related options; another option
ultimately depends on the original income assets throughout the life of the option
price information, called a strong path dependent options.
Weak path related options in the most typical one is crossing options (barrier option).
Strictly speaking, American-style option is also a weak path related options.
Strong There are two main path-related options: Asian options (Asian option), and
lookback options (lookback option). Asian option returns the due date depends on the
entire life of the option price of primary assets experienced, on average, were divided
into meaning because of the average arithmetic average Asian options and the
geometric average Asian options; the final receipts of Lookback Options dependent
on the validity of the native and the biggest asset prices (small) value, the holder can
"look back" the evolution of the price, choose the largest (small)
value as the strike price.
The basic element options
The so-called options contracts, is the option buyer the seller to pay a certain amount
of option premium, is granted the required period in accordance with a pre-agreed
strike price to buy or sell a certain number of rights related to a commodity futures
contracts standardized contracts, options contracts have the following main elements:
the buyer, seller, royalties, strike price, such as notification and due date.
Performance options
Performance options have the following three conditions
1, buyers and sellers can be implemented by way of hedging performance.
2, the buyer can also be converted into futures contracts and options manner of
performance (in the options contract strike price level required to obtain a
corresponding futures position).
3, without any option expires, automatically lapse. If the option is the virtual value,
the option buyer will not exercise the option until the expiration of term of the right to
fail. In this way, the option buyer the right to pay losses up to gold.
Option premium
Addressed before the option premium, is to buy or sell options contracts prices. For
the option buyer, the option gives the buyer in exchange for certain rights, he must
pay a royalty to the seller; the option seller, he sold options and the assumed option
must fulfill the obligation, for which he receive a premium as a reward. Since
royalties are borne by the buyer, the buyer in the event of change in the most
unfavorable to take the maximum amount of loss, the premium, also known as
"insurance."
Options Trading Principles
Buy a certain strike price of call option, pay a small premium in the later are entitled
to the rights of futures-related buying. Once the price is really up, they carry a call
option to acquire a futures long low, then high level of rising prices by selling futures
contracts related to access to post profits, payment of royalties to make up after the
earnings are made. If the price has not increased, but decreased, may be abandoned or
low-cost transfer of call option, its biggest loss of royalties. The reason why the buyer
of call options to buy call options, because the relevant futures market through the
analysis of price changes, identify the relevant futures market price significantly
higher than the possibility of big, so he bought a call option, pay a certain amount of
premium. Once the market price is really a sharp rise, then he will buy futures for
cheap access to large profits, more than he paid to buy the right option amounts, the
ultimate benefit, he can in the market more high premium price of the option contract
to sell to hedge profit. If the call option the buyer of the relevant futures market price
does not accurately determine changes in trends, on the one hand, only a small margin
if the market price rose, the buyer may perform or hedge, for a little profit to make up
for the loss of royalty expenses; on the other hand, if the market price down, the buyer
is not performance, its biggest loss is the amount of premium paid.
The relationship between options trading and futures
Options trading and futures trading links between the distinct and. The link is: First,
both of which are standardized forward contracts for the sale and purchase transaction
characteristics; Secondly, the relations between prices, the futures market price of the
option strike price and the transaction contract have the right to determine the impact
of gold. In general, the option to finalize the transaction price is determined by
long-term futures contracts trading based on prices of similar goods delivery, but the
price difference between the two is an important basis for determining royalty; third,
futures options trading is the general content of the underlying transactions are a
certain number of futures contracts are trading the right. The more developed futures
and options trading has a foundation to carry out the more, therefore, the futures
market mature and complete rules for the generation and implementation of options
trading to create the conditions. Options trading for the emergence and development
of another futures hedgers and speculators to provide more choice of tools to expand
and enrich the contents of the futures market transactions; Fourth, can do more short
futures traders not necessarily for physical delivery. Options trading can also do more
short, the buyer need not actually exercise this right, as long as the benefit, you can
transfer this right away. Not necessarily non-performance is not the seller, while those
who can not exercise the option to buy the rights before the option by buying the same
method to remove his responsibility; Fifth, because the subject matter of options for
the futures contracts, options trading performance when The two sides will be a
corresponding futures position.
Options trading venue:
Options trading floor does not need to feature places within the trading in futures,
options can also be specialized in the Stock Exchange, Stock Exchange transactions
can also be related with stock options trading. The world's largest options
exchange in the world's largest options exchange Chicago Board Options
Exchange (Chicago Board Options Exchange, CBOE); Europe's largest
options exchange in the European Futures and Options Exchange (Eurex), formerly
known as Deutsche Futures Exchange (DTB) and Swiss Options a nd Financial
Futures Exchange (Swiss Options & Financ ial Futures Exchange,
SOFFEX); Asia, South Korea's options market has developed rapidly, and
the transaction size of the huge development of the world's best national
option, China Hong Kong and China Taiwan region has options trading. Domestically,
there are currently including the Zhengzhou Commodity Exchange, including several
of the options exchanges have been listed in a preliminary study in mainland China.
[Edit this section] the role of
Stock investors to open up investment channels, the expansion of investment options,
to adapt to the diversity of investment motives of investors, trading motives and
interests of the demand, in general, can provide investors with access to the possibility
of higher returns. (This article comes from Baidu)

								
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