Option refers to the contract reached between the buyer and the seller, which gives the option buyer the right to buy or sell a certain number of specific objects at an agreed time and price in the future. Therefore, option trading is also an option trading, and the buyer of the option has the right to buy or sell a certain amount of certain assets at a pre-agreed price (exercise price) within the agreed period. correct

In the option buyer, the payment of royalties gives the buyer the right to operate at the agreed price in the future without any obligation.

For the option seller, he only has the obligation to fulfill the contract, but has no right, and his subsequent operation must rely on the operational decision of the corresponding counterparty. This feature determines that the seller of the option bears a higher risk when the franchise income is limited.

The basic elements of the 02 option

(1) Option price: Also known as royalty and option fee, it refers to the fees paid by the option buyer to the seller to obtain the right to buy or sell an asset at the agreed price within the agreed period.

(2) Target assets: The target assets are the subject matter of the option contract, and are the assets purchased or sold by the buyer when exercising the rights stipulated in the option contract.

(3) Exercise direction: The exercise direction is the operation direction of the option buyer when exercising. There are two exercise directions: buy and sell, and the exercise direction is determined by whether the option type is call option or put option.

(4) execution price: The exercise price is the price agreed in the option contract to buy or sell the underlying assets when the buyer exercises his rights.

(5) Validity period: the expiration date of the option. If the buyer fails to exercise this right within the validity period, the option will be invalid. For example, the expiration date of iron ore option i220 1-C-800 is 202165438+February 7.

03 classification of options

According to the rights of option buyers, options can be divided into call options and put options.

Call option means that the buyer of the option has the right to buy a certain number of underlying assets from the seller at the exercise price within a specified time. Call options can also be called call options and call options.

Put option: it means that the buyer of the option has the right to sell a certain number of underlying assets to the seller at the execution price within a specified time, and the put option can also become a put option, etc.

Options can be divided into European options and American options according to the time when the option buyer executes the options.

European option: the buyer of European option can only exercise it on the expiration date of the option. At present, domestic stock indexes and ETF options are European options. Listed European options include Shanghai and Shenzhen 300 stock index options, Shanghai 50ETF options, Shanghai 300ETF options and Shenzhen 300ETF options. Stock index options may be listed in the future, and the probability is European options.

American option: American option allows the buyer to exercise at any time before the option expires, so the buyer's right of American option is relatively large, and the seller's risk to American option is correspondingly large, so the price of American option is relatively high under the same conditions.

At present, all commodity options options in China are American options:

Previous issues: Shanghai gold, Shanghai copper, Shanghai aluminum, Shanghai zinc, rubber options, crude oil.

Big business office: soybean meal, corn, iron ore, liquefied petroleum gas, polypropylene, polyvinyl chloride, plastic L, palm oil options.

Zhengshang Institute: sugar, cotton, PTA, methanol, rapeseed meal, thermal coal options.

According to the relationship between the execution price and the market price of the subject matter, it can also be divided into real options, flat options and virtual options.

A liquidation option refers to an option whose exercise price is equal to the price of the underlying futures contract.

Real option refers to the option that the exercise price of call option (put option) is lower (higher) than the underlying futures contract price.

Virtual option refers to the option that the exercise price of call option (put option) is higher (lower) than the underlying futures contract price.

Call option: hypothetical option: strike price > futures contract price, real option: strike price, target price, hypothetical option: strike price.