This article comes from the official account: Option Understand
How to hedge individual stock options is a matter that many investors can't figure out, and this time I will take you to understand this problem. #期权日记##期权交易##上证50etf期权#
How to hedge individual stock options?
保护性认购期权（Protective Call）：
If you own a stock and are worried about the price falling, you can buy a put option as insurance. If the stock price falls, the put option increases in value and can offset a portion of the stock's losses.
保护性认沽期权（Protective Put）：
If you hold a stock and expect the stock price to rise, but want to protect yourself from a sudden drop, you can buy a put option. If the stock price falls, the put option will increase in value, thus providing protection.
跨式期权(Straddle):
If you expect the stock to move significantly but are unsure of its direction, you can buy both a call and a put option (with the same strike price and expiration date). Whether the stock price rises or falls, the increase in the value of one option may offset the loss of the other.
领口策略（Collar）：
If you hold the stock and want to limit potential losses while giving up some upside potential, you can execute both a sell call option and a buy put option. This way, you can earn a premium by selling a call option, which you can use to pay for the purchase of the put option.
Can OTC options be used for individual stock hedging?
OTC options hedging involves investors buying and selling OTC options contracts to mitigate or eliminate the risk of OTC option prices. This process mainly includes the key steps of selecting the appropriate hedging strategy, calculating the hedge ratio, and implementing the hedging trade. Although over-the-counter options hedging can effectively reduce market risk, investors also need to be aware of the risks inherent in options trading. Since the OTC options market is not formally regulated by exchanges, there is a certain amount of credit risk. Therefore, when using OTC options for hedging, investors must carefully evaluate the balance between option fees and hedging effectiveness to ensure that the hedging strategy adopted can achieve the desired overall effect.
How do I participate in OTC options?
In fact, OTC options are not allowed to participate in individuals for the time being, and can only be participated by institutions. Moreover, the threshold of institutions is very high, so it is not easy to participate in OTC options. But if you want to participate, individual investors can also use institutions to quote and inquire to participate in options, as long as you find a stable institution, similar to options.