What Is a Gold Option?

Gold options are the right of the buyer and seller to purchase a certain amount of the target at a future agreed price, not the obligation. If the price trend is beneficial to the option buyer, it will exercise its rights and profit, and if the price trend is unfavorable, give up the purchase The right to lose is only the cost of the option at that time. The cost of buying and selling options is determined by market forces. Because gold options trading involves a lot of content, options trading investment tactics are also more complicated and difficult to master. At present, there are not many gold options markets in the world. Gold options investment also has many advantages, such as strong leverage and large amounts of investment with a small amount of money; for the purchase and sale of standard contracts, investors do not have to worry about storage and gold quality; it has the function of reducing risks.

Gold options

Refers to the right to stipulate gold that is standardized at a predetermined price and time period.

Gold options contracts also work with other commodities and

Is one that has appeared in the last 10 years

The contents of a standard gold options contract include:

1. The subject of the transaction. Mainly refers to transactions

An option is an option. Buyer of options (pay

At present, China has not opened formal options trading, and there are no physical options.

For domestic

From domestic

With the official listing of "Gold Futures" on the Shanghai Futures Exchange on January 9, China's first "financial futures" product was officially launched. "Gold futures" and "gold options" are both gold derivative trading products. What are the differences and similarities between the two products, should individual investors choose "gold futures" or "gold options" to invest?

Low investment threshold "gold options"

The object of "Gold Futures" trading is gold contracts of various durations provided by the Futures Exchange. The quotation is provided in RMB. The starting point of the transaction is 1 contract, that is, 1000 grams. The margin standard for individual investment in gold futures contracts is generally 11% of the contract value. The current contract is the June 2008 contract. Individual investors need at least 24,000 yuan to buy and sell. There is a daily limit for daily trading. 5 %limits. The object of "gold options" trading is spot gold in the international market, the quote is provided in US dollars, and the starting point of the transaction is 20 ounces of gold, which is 622 grams. Individuals investing in gold options need to pay a certain option fee, and the options offered by the bank include 6 types ranging from one week to 6 months. In terms of the shortest week option, the option fee is generally $ 10 per ounce. Investors need to invest 200 US dollars for gold options investment. There is no limit on the price of "gold options".

Buy up or down

"Gold futures" and "gold options" are essentially buying and selling a type of forward contract, which stipulates that a certain amount of gold will be bought or sold at a certain price in the future. For individual investors, neither of these two types of business can be actually delivered, so the way to make a profit is to take advantage of changes in contract prices to get spread income. Compared with spot trading, these two trading methods have the function of leverage amplification, and can choose bullish or bearish gold in contract selection, so the market environment applicable to their trading is more extensive.

Beware of risks

Because they are different products, "Gold Futures" and "Gold Options" face different investment risks. When investing in gold futures, individual clients face the risk of forcibly liquidating positions due to insufficient margin balances. The client may lose all funds in the account. As the domestic gold futures market price changes are affected by fluctuations in the international market, and the gold price often fluctuates sharply in the New York market at night, it is inevitable that the gold price on the domestic futures exchange will have a gap in the price trend, and the transaction risk of investor positions will increase. When trading gold options, the client, as the buyer of the option, has its biggest loss determined at the beginning of the transaction, that is, the option fee paid to the bank. No matter how the price of gold changes in the future, the customer's maximum loss has been determined. As long as the market fluctuations are beneficial to the customer during the validity period of the option (including the expiration date), the customer can choose to sell the option to lock in the profit, without having to worry about the large reverse fluctuations.

"Gold options" suitable for medium-term positions

According to Bank of China gold analyst Xu Ming, in view of the international market, derivative transactions of gold often combine the two trading methods of gold futures and gold options. As the domestic gold derivatives market continues to mature, individual investors can try to get involved in the trading of "gold futures" or "gold options." Relatively speaking, "gold options" have higher investment flexibility and stronger leverage functions, which is more suitable for use when gold prices fluctuate sharply. It is suitable for investors who intend to hold gold positions in the medium term. ^[3]