First, it is directly used as a tool for enterprise financing.

As a financial commodity, options have several remarkable characteristics: first, the trading object of options is a right, that is, the right to buy or sell a specific subject matter, but it does not undertake the obligation to buy or sell; Second? This right has a strong timeliness? If the option is not exercised beyond the prescribed validity period, it will automatically expire; Third, options have small and large leverage effects. The rights and obligations of buyers and sellers of option contracts are asymmetric. This is manifested in the buyer's right to perform without undertaking obligations, as well as the asymmetry of risks and benefits. For the buyer, he may get unlimited income by exercising the option at a favorable price, but the biggest risk he bears is only the royalty paid for the option, which is the opposite for the seller. This means that option investment can buy unlimited profit opportunities at the expense of paying limited royalties. The above characteristics make options very suitable as an effective means to avoid risks and increase returns. Enterprises can invest idle funds in the option market, or invest in stocks and options at the same time. When investing, they can predict the risk (the biggest loss of royalties), but they may get multiple benefits. Once the market is not good, you can also reverse the operation to make up for the loss. The effect is better than traditional trading tools. This is also the main reason for the rapid development of option derivatives in recent twenty years. In western countries, due to the burden of income tax and capital gains tax, some investors tend to hold options until their short-term gains are converted into long-term capital gains to avoid paying short-term gains tax. Options are sometimes used in acquisition strategies. The option of the merged company to buy the shares of the target company. When enough options are purchased and the number of shares owned reaches the level that must be reported to the Securities and Exchange Commission, these options will be exercised to purchase these shares. This strategy reduces the acquisition cost of the acquired company. These are all examples of direct use of options as a means of financial management. In fact, any asset, whether tangible or intangible, can become the subject matter of the option, and even the option itself can become the subject matter, thus forming multiple options. The continuous innovation of options makes trading more flexible and has more functions, which meets various hedging and speculation needs of enterprises. With the gradual standardization and maturity of China's financial market, we should also consider establishing an option trading market to give enterprises more financing space.

Second, the application of option theory in pricing

Many securities issued by enterprises have obvious option characteristics, such as warrants, rights and convertible bonds. They stipulate that the holder has the right (but not the obligation) to purchase or convert into enterprise shares at the agreed price under certain conditions, which forms the right to purchase and has a time limit. When the stock price of an enterprise rises, the more benefits the holder gets by exercising the option. If we ignore their option characteristics, we will obviously underestimate the cost of these securities and overestimate the profits of enterprises, thus distorting the financial information of enterprises, which is not conducive to financial decision-making, so we must consider the option price contained in them. For example, convertible bonds can be regarded as ordinary bonds with options. As long as the annual standard deviation of stock return rate can be obtained (which can not be directly observed, but can be calculated according to historical data), Black-Scholes OPM can be used to calculate the bond option price conveniently, and the interest cost of bonds is the real financing cost of convertible bonds. The above securities can be regarded as a special case of stock options. In fact, for enterprises with liabilities, equity and corporate bonds themselves can also be regarded as a variety of options. Corporate bonds are issued by enterprises, representing the responsibilities of enterprises, and shareholders are responsible for the bonds. If the interest is paid on schedule, at the end of each period, shareholders can make necessary repayment or default. If they choose to pay, they will get a new option, otherwise the paid option will be invalid, and the loss will be the balance sheet of the enterprise they invest in. From the perspective of net present value, the project should be abandoned and discounted according to the predicted cash flow. However, it is necessary to analyze the framework of option release of the project, and regard the development right fee of the oil field as the premium paid by purchasing the call option. Oil is equivalent to basic assets, and enterprises have the right to exploit oil after paying the development right fee, but they have no obligation. As long as the oil price exceeds the strike price and option cost during the performance period, the enterprise will be profitable, otherwise it will not exploit the cost of losing the right to development. In this case, the project is acceptable as long as the option price of the project is greater than the development right price. This project is feasible, because it can provide investors with choices to continue investing in the future. Therefore, after the introduction of options, the value of investment projects = the value of traditional NPV+ options. This modifies the net present value method.