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Do you want to spend money on options during the earnings season? If you don't understand the concept, it's all for nothing

Well, my mooer, I'm an option sir. Today's election will be the first to reach the bottom of the debate and the right to speak at home.
The first quarter of the US equity financial year has started, and many mooers are planning to move forward in the financial year without stopping. It is true that you want to buy a wallet without thinking about it. I want to change bikes and not lose a damn.Today, let's start with the most basic concept, look at the options exactly.
Full text: 2680 words; suitable for people: interested in options white; main content: interpretation of the basic concept of options, including what options are, 6 elements of options, and how options help you better invest.
1. What is an option
The concept of options can be viewed in two parts:“Term” means “term” and “right” means “right”。
In short, an option is a contract that gives the contract holder the right to buy or sell the subject asset at the strike price in the future. The underlying asset can be a stock, etf, etc.
Looking at some of these mooers, they start to get a lot of trouble. Let me give you an example and make it a little clearer.
1.1 Know More About Theatre: Call - Bullish Buy Up, Not Bullish Sell
Suppose small A wants to buy a house, so signed a contract with the developer, an agreement to 5 million delivery of the new home after a month, and paid 200,000 prepayments. In the next month, even small A remorse, 200,000 prepayment will not be refunded.
If a month later, the house rises and the price rises more than 5.2 million, the small A will earnThe house depreciates, the price is less than 5.2 million, the small A lost。
In this example, a small A is equivalent to an optionpurchaser, the developer is equivalent to the optionseller。
The purchase contract between them is equivalent to a“Options Contract”. Small A enjoys the purchaserights, the developer undertakes the sale of housesobligations。
If a month later，Small A does not want to buy this house，He just lost 200,000 advance；But for developers，Signing a contract，He must according to the provisions，In a month at the price of 5 million to sell the house to small A.
Let's think, if you were small A, under what circumstances would you be willing to sign this contract (option contract)?
It must be.This house is expected to rise over 5.2 million, signing this contract is cost-effective. So, options trading is essentially based on expectations of the after-market.
Small A sign the contract, the equivalent ofPurchased a call option(Buy Call)Because he expects the house price to rise over 5.2 million, so he bought the house at a total price of 5.2 million.
Let's think again, if you are a developer, under what circumstances would you be willing to sign this contract (option contract)?
It must be.This house is expected to rise but 5.2 million, signing this contract is cost-effective.
The developer signs the contract, the equivalent ofSold a call(Sell Call), because he expects the house price will not rise more than 5.2 million, so sell the house at a total price of 5.2 million.
This is the relationship between the buyers and sellers of call options. Simply put, memorize 9 words to:Bullish Buy Bullish, Unbullish Sell Bullish。
1.2 Know more about Theatre: Put - bearish buy, not bearish
In addition to call, there are put options. Let's look at one more story.
Little A has a beloved car, very worried about the future car being scratched. So he signed a contract with the insurance company and spent $5,000.Give your car a one-year insurance.
If a year, the car is damaged, the insurance company will pay 20,000 yuanEverything is safe, and the insurance company will not return the $5,000 paid a year ago。
In this example, a small A is equivalent to an optionpurchaser, the insurance company is the equivalent of the optionseller。
The insurance contract they sign is equivalent to a“Options Contract”. Small A enjoy double indemnityrightsThe insurance company has compensationobligations。
Let's think, what is the expectation of Little A this time?
It must be.Trucks are expected to be damaged within one year, signing this contract is cost-effective.
Small A sign the contract, the equivalent ofPurchased a put option(Buy Put), because he expects the car to be damaged, so the insurance contract is not a loss of 5,000.
Let's think again, what are the expectations of insurance companies?
YesGuess that the trolley will not be damaged in a year, signing this contract is cost-effective.
The insurance company signs the contract, equivalent toSold a put option(Sell Put)He is willing to make a pledge “$20,000 compensation if damaged” on the basis of a charge of $5,000, because he expects the trolley to not be damaged.
This is the relationship between the buyers and sellers of put options. Simply put, memorize 9 words to:Bearish buy down, not bearish sell。
【Theatre Test】
2. options 6 elements
You can get to know the concept of what is aimed at the big city in the first place by going through the famous Little Theatre. Next, let's take a look at the detailed quotation page on Futubull for a closer look at the options page.Options 6 Elements。
Well, my mooer, I'm an option sir. Today's election will be the first to reach the bottom of the debate and the right to speak at home.[Shocked][Shocked][Shocked] The first quarter of the US equity financial year has started, and many mooers are planning to move forward in the financial year without stopping. It is true that you want to buy a wallet without thinking about it. I want to change bikes and not lose a damn.Today, let's start with the most basic concept, look at the options exactly. Full text: 2680 words; suitable for people: interested in options white; main content: interpretation of the basic concept of options, including what options are, 6 elements of options, and how options help you better invest. 1. What is an option The concept of options can be viewed in two parts:“Term” means “term” and “right” means “right”。 In short, an option is a contract that gives the contract holder the right to buy or sell the subject asset at the strike price in the future. The underlying asset can be a stock, etf, etc.[Awesome][Awesome][Awesome] Looking at some of these mooers, they start to get a lot of trouble. Let me give you an example and make it a little clearer. 1.1 Know More About Theatre: Call - Bullish Buy Up, Not Bullish Sell Suppose small A wants to buy a house, so signed a contract with the developer, an agreement to 5 million delivery of the new home after a month, and paid 200,000 prepayments[Dollar]. In the next month, even small A remorse, 200,000 prepayment will not be refunded. If a month later, the house rises in value, and the house price rises more than 520...
The target of the transaction: Corresponding to the stock. This is a good understanding, no longer winded.
orientations：Call and Put. Remember that options trading is built on top of expectations and is essential for direction judgement. Once the direction is wrong, funds directly hit the water drift.
exercise price: The price at which to buy or sell at the time of exercise on a certain day in the future. When choosing options, strike price selection is essential. We recall the example of small A house purchase, 5 million can be seen as a strike price.
Royalty: The cost to pay to buy this option, i.e.Price of options. Rights Gold ClubFluctuates as the price of the trading subject changes, not immutable. In the above example, the prepayment paid by small A home purchase and car insurance can be considered as a premium.
Option prices can be divided into three kinds of intra-price, out-of-price and parale-price.
ForBullish OptionsIn terms of:
Within Price: Market price below the market price of the stock option
Out-of-Price: The share price is higher than the market price of the benchmark
parities: The market price of the stock option is equal to the market price of the benchmark
ForBearish OptionsIn terms of:
Within Price: The share price is higher than the market price of the benchmark
Out-of-Price: Market price below the market price of the stock option
parities: The market price of the stock option is equal to the market price of the benchmark
Whether it is a call option or a put option,The more the price, the more expensive the rights. Price must be paid attention to before selecting the right option! Any mooer can open the futures chain of the Futubull and have a clearer understanding of the distribution of the rights price:
Well, my mooer, I'm an option sir. Today's election will be the first to reach the bottom of the debate and the right to speak at home.[Shocked][Shocked][Shocked] The first quarter of the US equity financial year has started, and many mooers are planning to move forward in the financial year without stopping. It is true that you want to buy a wallet without thinking about it. I want to change bikes and not lose a damn.Today, let's start with the most basic concept, look at the options exactly. Full text: 2680 words; suitable for people: interested in options white; main content: interpretation of the basic concept of options, including what options are, 6 elements of options, and how options help you better invest. 1. What is an option The concept of options can be viewed in two parts:“Term” means “term” and “right” means “right”。 In short, an option is a contract that gives the contract holder the right to buy or sell the subject asset at the strike price in the future. The underlying asset can be a stock, etf, etc.[Awesome][Awesome][Awesome] Looking at some of these mooers, they start to get a lot of trouble. Let me give you an example and make it a little clearer. 1.1 Know More About Theatre: Call - Bullish Buy Up, Not Bullish Sell Suppose small A wants to buy a house, so signed a contract with the developer, an agreement to 5 million delivery of the new home after a month, and paid 200,000 prepayments[Dollar]. In the next month, even small A remorse, 200,000 prepayment will not be refunded. If a month later, the house rises in value, and the house price rises more than 520...
Well, my mooer, I'm an option sir. Today's election will be the first to reach the bottom of the debate and the right to speak at home.[Shocked][Shocked][Shocked] The first quarter of the US equity financial year has started, and many mooers are planning to move forward in the financial year without stopping. It is true that you want to buy a wallet without thinking about it. I want to change bikes and not lose a damn.Today, let's start with the most basic concept, look at the options exactly. Full text: 2680 words; suitable for people: interested in options white; main content: interpretation of the basic concept of options, including what options are, 6 elements of options, and how options help you better invest. 1. What is an option The concept of options can be viewed in two parts:“Term” means “term” and “right” means “right”。 In short, an option is a contract that gives the contract holder the right to buy or sell the subject asset at the strike price in the future. The underlying asset can be a stock, etf, etc.[Awesome][Awesome][Awesome] Looking at some of these mooers, they start to get a lot of trouble. Let me give you an example and make it a little clearer. 1.1 Know More About Theatre: Call - Bullish Buy Up, Not Bullish Sell Suppose small A wants to buy a house, so signed a contract with the developer, an agreement to 5 million delivery of the new home after a month, and paid 200,000 prepayments[Dollar]. In the next month, even small A remorse, 200,000 prepayment will not be refunded. If a month later, the house rises in value, and the house price rises more than 520...
Guess, why the more options are priced, the more expensive it?
due date: The option will expire on this day.
Contract Size: Each US option contract corresponds to 100 corresponding assets. Assuming Small A buys a Microsoft call option at US$10/share, the total amount he needs to pay is US$10*100 = US$1,000
3. Role of Options
See here, every mooer wants to have their own understanding of the underlying objective. The great Kiki opens the door to the opportunity!
A mooer asked: Is it not Assir, how much is there to explain. Where is your choice to be a speaker?
Sir is very pleased to be so cautious before investing.
In general, options have two major advantages:
Risk hedging: escort for the stock
Yes, you read it right.When it comes to options, many people think of “high risk” and “high volatility”, but in essence, the option was originally designed asA hedging toolAnd the use of.
Well, my mooer, I'm an option sir. Today's election will be the first to reach the bottom of the debate and the right to speak at home.[Shocked][Shocked][Shocked] The first quarter of the US equity financial year has started, and many mooers are planning to move forward in the financial year without stopping. It is true that you want to buy a wallet without thinking about it. I want to change bikes and not lose a damn.Today, let's start with the most basic concept, look at the options exactly. Full text: 2680 words; suitable for people: interested in options white; main content: interpretation of the basic concept of options, including what options are, 6 elements of options, and how options help you better invest. 1. What is an option The concept of options can be viewed in two parts:“Term” means “term” and “right” means “right”。 In short, an option is a contract that gives the contract holder the right to buy or sell the subject asset at the strike price in the future. The underlying asset can be a stock, etf, etc.[Awesome][Awesome][Awesome] Looking at some of these mooers, they start to get a lot of trouble. Let me give you an example and make it a little clearer. 1.1 Know More About Theatre: Call - Bullish Buy Up, Not Bullish Sell Suppose small A wants to buy a house, so signed a contract with the developer, an agreement to 5 million delivery of the new home after a month, and paid 200,000 prepayments[Dollar]. In the next month, even small A remorse, 200,000 prepayment will not be refunded. If a month later, the house rises in value, and the house price rises more than 520...
For example, Little A holds 100 shares of Tesla's shares, but fears that the share price will fall after his earnings report, and he bought a Tesla Put.
If Subsequent Tesla Share Price Fell, Little A LookAfter buy-down, you can exercise this option to control their losses. If the subsequent Tesla goes up, small A is justPaid a premium for the purchase of the option. This is actually a little A to their ownSmall car insuranceis a reason.
2. to a small boda: four or two kilos
Where the option makes people vein, is his leverage effect. Four or two kilos, is not very excited?Options, as a derivative instrument, have a large profit and loss ratio. In the case of big fluctuations, it is not surprising that an option value has turned dozens of times.
But do not forget,Benefits and risks. Option trading is like a roller coaster and must be done wellRisk Management. Do not overdo it, take the initiative to be a rich boy.
Well, my mooer, I'm an option sir. Today's election will be the first to reach the bottom of the debate and the right to speak at home.[Shocked][Shocked][Shocked] The first quarter of the US equity financial year has started, and many mooers are planning to move forward in the financial year without stopping. It is true that you want to buy a wallet without thinking about it. I want to change bikes and not lose a damn.Today, let's start with the most basic concept, look at the options exactly. Full text: 2680 words; suitable for people: interested in options white; main content: interpretation of the basic concept of options, including what options are, 6 elements of options, and how options help you better invest. 1. What is an option The concept of options can be viewed in two parts:“Term” means “term” and “right” means “right”。 In short, an option is a contract that gives the contract holder the right to buy or sell the subject asset at the strike price in the future. The underlying asset can be a stock, etf, etc.[Awesome][Awesome][Awesome] Looking at some of these mooers, they start to get a lot of trouble. Let me give you an example and make it a little clearer. 1.1 Know More About Theatre: Call - Bullish Buy Up, Not Bullish Sell Suppose small A wants to buy a house, so signed a contract with the developer, an agreement to 5 million delivery of the new home after a month, and paid 200,000 prepayments[Dollar]. In the next month, even small A remorse, 200,000 prepayment will not be refunded. If a month later, the house rises in value, and the house price rises more than 520...
To know more about the future possibilities above, if there are other ways for each mooer, please discuss it in the comments section.
Find out more useful options trading knowledge on Futu Options SIR! Click on the below image and you can quickly notice me!
Well, my mooer, I'm an option sir. Today's election will be the first to reach the bottom of the debate and the right to speak at home.[Shocked][Shocked][Shocked] The first quarter of the US equity financial year has started, and many mooers are planning to move forward in the financial year without stopping. It is true that you want to buy a wallet without thinking about it. I want to change bikes and not lose a damn.Today, let's start with the most basic concept, look at the options exactly. Full text: 2680 words; suitable for people: interested in options white; main content: interpretation of the basic concept of options, including what options are, 6 elements of options, and how options help you better invest. 1. What is an option The concept of options can be viewed in two parts:“Term” means “term” and “right” means “right”。 In short, an option is a contract that gives the contract holder the right to buy or sell the subject asset at the strike price in the future. The underlying asset can be a stock, etf, etc.[Awesome][Awesome][Awesome] Looking at some of these mooers, they start to get a lot of trouble. Let me give you an example and make it a little clearer. 1.1 Know More About Theatre: Call - Bullish Buy Up, Not Bullish Sell Suppose small A wants to buy a house, so signed a contract with the developer, an agreement to 5 million delivery of the new home after a month, and paid 200,000 prepayments[Dollar]. In the next month, even small A remorse, 200,000 prepayment will not be refunded. If a month later, the house rises in value, and the house price rises more than 520...
Risk Disclaimers
This article is for informational and educational purposes only and does not recommend any specific investment strategies. Content is general, strictly for educational purposes and may not be suitable for all investors. The above does not take into account the financial situation, investment objectives, investment time frame or risk tolerance of individual investors. Before making any investment decision, you should consider your personal circumstances and associated risks.
Any examples provided herein are for illustrative purposes only and are not intended to reflect the investment results that any investor can expect. Options trading involves significant risks and may not be suitable for all investors. Before participating in any options trading and implementing any options trading strategy, investors must consider the characteristics and risks of options trading and consult with professional investment advisors when needed.
Risk Disclaimer: The above content only represents the author's view. It does not represent any position or investment advice of Futu. Futu makes no representation or warranty.Read more
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