This article comes from the official account: Option Understand
Today's options understand what is an on-exchange option and how does it work? An on-exchange option is a standardized, standardized and traded financial derivative in the open market. Compared to OTC options, exchange-traded options have higher liquidity and transparency. #期权交易##上证50etf期权##期权日记#
What are Exchange Options?
Exchange options, also known as exchange options, refer to standardized options contracts that are centrally traded and uniformly settled within a stock exchange or futures exchange. The contract terms of exchange-traded options, such as the underlying contract, trading unit, exercise price, expiration date, minimum fluctuation unit, etc., are stipulated by the exchange, cannot be changed, and are uniform for all investors.
The characteristics of exchange-traded options include high liquidity, exchange regulation, strict risk control, and relatively low transaction fees. Due to the supervision of the exchange, the transparency and fairness of exchange options trading are guaranteed, while the margin requirements set by the exchange help to control trading risks.
In addition, there are two main ways to exercise on-exchange options: European-style options and American-style options. European-style options can only be exercised on the expiration date, while American-style options are allowed to be exercised at any time prior to the expiration date.
How do exchange options work?
First of all, consider the contract term and liquidity, and choose the in-the-money or out-of-the-money options of the month with high activity. When the trend is clear, choosing out-of-the-money contracts with high leverage is expected to achieve greater returns. The decision to buy a put or call option depends on the prediction of the future trend of the 50ETF. To choose the strike price, you should choose an option that is close to the price of 50ETF and understand the upper limit of the premium investment.
What should I pay attention to when trading exchange options?
Deepen the understanding of the basics of options: Investors should have a deep understanding of the basic concepts of options, including call options, put options, option prices (composed of intrinsic value and time value), strike price, strike date, etc.
Evaluate your own risk tolerance level: Since options trading is risky and may cause investors to lose all their investment, investors should decide whether to participate in options trading according to their own risk tolerance level.
Determine a trading strategy: Investors need to develop an appropriate options trading strategy based on market conditions, personal investment objectives and risk tolerance.
Pay attention to market changes: Option prices will be affected by various factors such as the price of the underlying asset, interest rates, remaining maturity, volatility, etc., so investors need to pay close attention to market dynamics in order to adjust their trading strategies in a timely manner.
Follow the laws and trading rules: Options trading is regulated by strict laws and trading rules. Investors should be familiar with and abide by the relevant laws and rules to prevent illegal operations.