Stock index option is a derivative contract, and its underlying asset is a stock index, not a single stock. The trading and settlement methods of stock index options are similar to those of stock options, but the underlying assets are the whole stock index, such as SSE 50 Index and CSI 300 Index.

Stock index options allow investors to buy or sell the whole stock index at a specific price (exercise price) at some future time. The buyer buys stock index options and gets the right to exercise them on the expiration date, while the seller is obliged to exercise them on the expiration date. The exercise method of stock index options can be European options (which can only be exercised on the expiration date) or American options (which can be exercised at any time before the expiration date).

The trading purpose of stock index options is usually to obtain the leverage effect on the stock market index or to protect the portfolio. They can be used for speculation, hedging or increasing the diversity of the portfolio.