It should be noted that investors who use short positions can earn royalties to reduce the cost of holding positions. However, if the stock goes up, the option goes up accordingly, and the buyer who subscribes for the option requests to exercise, and the investor who opens the position to cover the position needs to fulfill his obligations, which is equivalent to the income from buying the subject matter offsetting the exercise cost of the subscribed option, and the biggest income is the royalty.
This strategy is suitable for investors who already hold stocks, but are not optimistic about the short-term trend of stocks and are unwilling to sell stocks, and use selling call options to obtain equity fees to reduce the cost of holding stocks. If the stock price does not rise as expected, the options sold will not be exercised and the number of shares held by investors will not change.
However, if the stock price rises sharply, the option buyer will demand the exercise, and investors will be forced to sell the stock at the agreed price, but even so, investors are willing to accept it because the agreed price is generally higher.
For example, the Shanghai Stock Exchange has set a strict entry threshold for option investors, and has certain requirements for their funds, qualifications and qualifications. Investors who participate in stock option trading need special training and pass the corresponding professional knowledge test.
In addition, the Shanghai Stock Exchange implements a hierarchical management system for investors. According to the comprehensive situation of investors' investment experience, professional knowledge, financial status and risk preference, investors are divided into three levels, and corresponding trading rights are set: first-tier investors can use reserves and insurance strategies to open positions when holding stocks, second-tier investors can increase their buying and opening rights, and third-tier investors can further increase their selling and opening positions.
Provide better services for investors. In order to prevent investors from forgetting or unable to exercise the contract when the option expires and missing the profit opportunity, the stock option business is provided with automatic exercise service by brokers, and the trigger conditions and exercise methods of automatic exercise are agreed by brokers and customers.