What are options? How to trade

Option is a kind of option. When the buyer of the option pays a certain amount of royalties to the seller, he gains this right, that is, he has the right to sell or buy a certain number of subject matter at a certain price within a certain period of time.

Of course, the essence of option trading is not to buy and sell a commodity, but to earn the difference profit by buying and selling the contract market made by the commodity.

How are options traded?

Options can realize T+0 trading, and T+0 can be traded back and forth many times in the same day. Compared with the current stock market, the option based on the stock target can realize T+0 trading mode, that is, buy on the same day, sell on the same day, and buy and sell at any time, whether it is profit or stop loss.

When the market rises in early trading, you can buy call options and subscribe to sell them at high points. When judging that there is a downward trend, you can buy put options and sell them at the end of the session.

Option is also an effective risk management tool.

By buying options, you can protect the value of spot or futures without the risk of extra margin. By selling options, you can reduce the cost of holding positions or increase the income of holding positions. The comprehensive application of different exercise prices and different maturity rights makes it possible to provide tailor-made hedging strategies for hedgers with different preferences.

Options provide investors with more investment opportunities and strategies.

In futures trading, only when the price changes directionally can the market have investment opportunities. If the price is in a consolidation period with less fluctuation, the market lacks investment opportunities.

In option trading, whether the futures price is in a bull market, a bear market or a consolidation, it can provide investors with opportunities to make profits. Investors can buy cross-type and wide-span trading portfolios when they look at multi-volatility; On the contrary, if investors are bearish on volatility, they can do the opposite of the above strategy.

The specific leverage effect of options, each contract has a different leverage, and the leverage of the contract is not a fixed value.

Many friends come to the option market from stocks and futures because they are interested in the excess return of options. Why? Because the benefits and risks of options are asymmetric, options have certain leverage. Therefore, when the market price is good, options can have excess returns.