Copper options listed on the non-ferrous industry risk management level further improved

SMM, Aug. 10: commodity futures options may be expanded again. Yesterday, the last issue of the copper options contract and related rules to the industry, and the relevant content of the open consultation with the market.

The significance of the introduction of Copper options in the previous issue

Once the copper option simulation trading is successfully listed, it will become the third commodity option to be successfully listed in China's futures market after sugar and soybean meal, and it will also be the fourth option variety, and it will also be the first industrial option born in China. As we all know, the copper futures contract launched by the Shanghai Futures Exchange is a more mature risk management tool. In recent years, a large number of enterprises related to the copper industry chain have participated in the futures market to hedge. However, due to the large price fluctuations in the copper futures market, there are certain margin requirements, at the same time, futures trading will be completely bundled with risk and return, can not meet the needs of some investors and customers.

Compared with the traditional copper futures market, copper futures option is a financial tool with lower cost, easier operation and easier risk control. The introduction of copper futures option not only provides more diversified and refined risk aversion tools for copper related enterprises. At the same time, it will also help to enhance the pricing power of copper in the world financial market. Listed copper options are of great significance to promote the risk management level of China's non-ferrous industry and enhance the function of futures market to serve the development of real economy.

Global copper options market

At present, the main exchanges that carry out copper futures trading are the London Metal Exchange (LME), the Shanghai Futures Exchange (SHFE), the New York Commodity Exchange (COMEX), which is part of the CME Group, and the Indian MCX Exchange. Among them, both LME and COMEX have copper futures options trading. LME is the largest copper futures market in the world, and copper futures options were launched in 1987. In 1997, LME introduced the average price option of copper futures. COMEX is the third largest copper futures exchange in the world, and COMEX copper futures options were launched in 1988. In addition to copper futures options, COMEX also launched a copper average option contract based on copper swap contracts.

Draft for soliciting comments on copper option contracts

According to the published draft of copper option contract, the type of copper option contract is call option and put option, the trading unit is 1 hand (5 tons) copper futures contract, and the minimum change price is 1 yuan / ton. The range of the limit is the same as that of the copper futures contract; the contract month is from January to December.

At the same time, the exercise price covers the price range corresponding to the upper and lower limit range of the copper futures contract on the previous trading day, that is, the exercise price is ≤ 40000 yuan / ton, and the interval between exercise price is 500yuan / ton. 40000 yuan / ton < exercise price ≤ 80000 yuan / ton, exercise price distance is 1000 yuan / ton, exercise price > 80000 yuan / ton, exercise price distance is 2000 yuan / ton.

It is worth noting that the contract exercise is European option, that is, the due date buyer can apply for exercise and waive the application before 15:30.

Yao Hong, assistant general manager of Haitong Futures, said that the exercise of copper options is relatively different. Previously, soybean meal and sugar options listed on the stock market were American options. That is, the exercise time stipulated in the option contract is every trading day from the buyer's call option to the expiration of the option. On the other hand, the copper option adopts the European option, and the exercise time is the due date of the option contract. This is also due to the fact that the exchange has found that the European style is more in line with the needs of the market when investigating the mode of trade in the spot market.

He expects that copper options will be more active after listing, because copper futures contracts, as the most mature varieties in the previous period, have the advantages of good liquidity, continuous contracts and transparent prices, which have long been recognized by the market. At the same time, the copper futures market is more mature, industrial customer participation itself is relatively high, the use of futures prices has become the industry practice, options are no stranger to this tool. In addition, the introduction of a market maker system on the exchange will ensure that the quotations of the contracts are in line with a reasonable pricing range and improve the liquidity of the contracts.

Option science popularization:

European option (European Options) refers to the option that the party to the call option must exercise at a specified time on or before the maturity date of the option.

American option (American option) is an option that can be executed on any day within the validity period after the transaction. That is, the option holder can choose to execute or not execute the option contract before 09:30 New York time on any working day before the option expiration date. American options allow option holders the right to buy (in the case of a call option) or to sell (in the case of a put option) the underlying asset on or before the maturity date.