What is Options Trading?

Options (Options) are an option. After the buyer of an option pays a certain amount of premium to the seller, he obtains this right, that is, he has the right to sell or buy a certain amount of the target at a certain price (strike price) within a certain period Rights (i.e. options trading) in kind (physical commodities, securities or futures contracts). When the buyer of an option exercises his rights, the seller must fulfill his obligations as specified in the option contract. On the contrary, the buyer can waive the exercise of the right. At this time, the buyer only loses the premium, and at the same time, the seller earns the premium. In short, the buyer of an option has the right to exercise the option and has no obligation to execute it; the seller of the option simply fulfills the obligation of the option.

1. Buyer or investor (taker): refers to the party who purchases an option, or the party who purchases rights.
2. A seller or a grantor: a party that sells rights;
3 Option price or premium (premium): Refers to the cost of the purchase right paid by the buyer to the seller, also known as insurance premium. Option premiums are of great significance; first, the maximum loss that an option buyer may suffer is controlled within the option premium, and second, an option seller can immediately receive an option premium income when selling an option. The loss of the buyer or the profit of the seller is subject to the option premium and will not exceed.
4 Transaction price: refers to the price of forward commodity transactions agreed between the buyer and seller, also known as the basic price or contract price.
5. Notification date (declaration date): When the buyer of an option requests delivery or delivery of a commodity contract, he must notify the seller on a predetermined delivery date or a day before the date of delivery, which is the "notification day" Or "statement day."
6. Expiry date: It refers to the predetermined delivery date or delivery date. On this day, a pre-declared option contract must be fulfilled. It is the end of the option contract validity period. This day is also known as the "Performance Day".

The elements of the option trading contract in the financial market are also the same, except that the "commodity" here is a financial commodity.

Depending on the execution time,

China is not yet open

(I) Unique profit and loss structure

Compared with investment instruments such as stocks and futures,

An option contract is required to make an option transaction. The contract of an option transaction usually includes the currency, quantity, time, delivery method (American or European), insurance rate (option price), etc. The next day the contract is signed, the buyer has to pay the insurance premium (1% -5%) to the seller. Once paid, the option is granted. After accepting the insurance premium paid by the buyer, the seller will bear the risk of exchange rate fluctuations during the contract. The buyer of an option contract is called the contract holder and is usually the manufacturer. The seller of an option contract is called the contract signer and is usually a foreign exchange bank. ^[3]