Crude oil options set sail smoothly! It will effectively improve the efficiency and accuracy of risk management of crude oil industry chain enterprises.

Shanghai crude oil options are officially listed for trading.

At 9: 00 a.m. on June 21, crude oil options were officially listed for trading in the Shanghai International Energy Trading Center, a subsidiary of the Shanghai Futures Exchange (hereinafter referred to as the Shanghai Futures Exchange).

At the listing event on the same day, Luo Hongsheng, director of the Futures Supervision Department of the China Securities Regulatory Commission, read out the CSRC's "reply on agreeing to the Shanghai International Energy Trading Center to carry out crude oil options trading." Li Jun, deputy director of Shanghai Local Financial Supervision Administration; Zhu Fang, deputy secretary general of China Petroleum and Chemical Industry Federation; Pan Yixin, executive vice chairman of China Air Transport Association; Huo Jinsan, general manager of China United Petroleum Co., Ltd.

In his speech, Li Jun said that as the first batch of options denominated in RMB and fully open to foreign investors, crude oil options combine international experience with local advantages, and will complement crude oil futures after listing. It will help to further enrich the derivatives series of the oil and gas industry, enable physical enterprises to form a more "tailor-made" portfolio hedging strategy, avoid the risk of price fluctuations and achieve sound operation. It will help to enhance the price influence of important commodities, enhance Shanghai's ability to allocate global resources, serve the high-quality development of the real economy, continuously enhance the radiation and global influence of Shanghai's international financial center, and enhance the urban energy level of Shanghai. start the Shanghai city brand.

In Zhu Fang's view, the listing of crude oil options will further enrich the crude oil price risk management tools, help to further effectively exert the function of the futures market, improve the risk management ability of oil refining enterprises, promote the structural adjustment, transformation and upgrading of the crude oil industry chain, improve the market competitiveness and international operation level of China's oil refining enterprises, and enhance the role and position of China's oil refining industry in the international market system.

Pan Yixin said that the cost of aviation kerosene accounts for about 30% of the total cost of airlines, and airlines have a strong demand for risk aversion and risk management of crude oil prices. The listing of crude oil options will provide more risk management tools for air transport enterprises, enhance the market competitiveness of China's air transport industry, and enhance the role and position of China's oil-related enterprises in the international market system.

Huojin San believes that after the listing of crude oil options, a trinity organic pattern will be formed together with spot and futures, which will provide more diversified and refined risk management tools for all enterprises in China's crude oil industry chain, enhance the sound management level of enterprises, and further enhance the competitiveness of enterprises.

Jiang Yan said that since the crude oil futures were listed in 2018, through a series of measures, such as introducing the market maker mechanism, the settlement price trading mechanism, issuing the day-to-day trading reference price, expanding the crude oil delivery storage capacity, and updating the crude oil delivery grade, the crude oil futures have been operating steadily and have shown strong resilience and self-repair ability under the impact of the epidemic and sharp fluctuations in the commodity market. It provides a practical, reliable, stable and effective place for relevant entity enterprises to manage risk, and the market function is brought into full play.

He said that in this context, the listing of crude oil options based on crude oil futures contracts can be described as natural. With the gradual transformation of China's oil-related enterprises to high-quality development, industrial enterprises have a deeper understanding of risk management, and the demand for risk management of crude oil prices tends to be more specialized and refined. The listing of crude oil options will form an effective supplement to the crude oil futures market, further improve the risk aversion system of domestic entity enterprises, and improve the efficiency and accuracy of risk management of crude oil industry chain enterprises.

The Futures Daily reporter learned that people in the industry have shown great enthusiasm for crude oil options. Liang Yi, general manager of the futures department of Sinochem Petroleum Co., Ltd., said that crude oil options have the characteristics of asymmetric risk-return and non-linear profit and loss. Enterprises hedging through options can not only achieve the same effect as futures hedging, but also may obtain further benefits.

"although crude oil futures can also help companies to stabilize related risks, it is difficult to meet the personalized needs of enterprises." Liu Yong, general manager of the current Business Planning Center of Shandong Jingbo Petrochemical Co., Ltd., said that options can be combined with futures and other tools to meet the individual needs of different enterprises.

The day's event was conducted in the form of a "cloud listing" with a combination of live and webcast. Guests and viewers from China Securities Regulatory Commission, Shanghai, relevant industry associations, enterprises in the upper and lower reaches of the crude oil industry chain, and news media jointly witnessed the listing of crude oil options online and offline.

Smooth operation on the first day of listing

According to the transaction data and market reaction on the day of listing of crude oil options, the operation of crude oil options on the first day is stable, the trading is active, and the transaction price is reasonable.

According to the data of the last stock exchange, 4475 crude oil options were traded on the first day of listing (unilateral, the same below), with a transaction value of 50.6857 million yuan. On the same day, there were 96 contracts in two series of crude oil options, with 1652 positions, a transaction-to-position ratio of 2.71, and a call-to-put ratio of 0.81. The contract with the largest position in call options is SC2109C510, and the contract with the largest position in the bearish period is SC2109P390.

The launch of crude oil options has been widely concerned by investors. Yang an, head of energy and chemical research and development in Haitong Futures, said that the trading of crude oil options on the first day of listing was more in line with market expectations, with active transactions concentrated on equal-value options and virtual-value options, which shows that investors' application of option tools is more mature and rational.

From the market point of view, South China Futures options analyst Wang Qian said that the recent crude oil futures prices fluctuated greatly, and the crude oil prices inside and outside the market showed a wide oscillation trend in recent days. Yesterday, the inner crude oil rose more than one point after the opening, affected by the slightly stronger opening of the bid, the opening price of the call option after the opening of the crude oil option was slightly higher than the listing price, and the opening price of the put option was slightly lower than the listing price. Shanghai crude oil futures maintained an oscillatory downward trend throughout the day, and both call and put options closed slightly lower near the closing level, with little overall volatility and changes. "on the whole, the trading price of crude oil options on the first day of listing is more reasonable. Due to the large single-hand contract scale of crude oil options, the trading volume is not comparable to other futures options." She said.

Jin Xiao, head of commodities research at the East Securities Derivatives Research Institute, said that the trading volume and position of options on the first day of listing were not particularly high, partly because of the remote months of the SC2109 and SC2110 contracts, and on the other hand, the recent volatility of the crude oil market was not too high, market participation was relatively moderate, and trading was in line with expectations.

Judging from the volatility of options, Wang Qian said that on the first day of listing, the implied volatility of crude oil options changed little throughout the day. The implied volatility of the SC2109 contract series of equal-value options rose after the opening of trading, then fell back quickly, and remained around 33% throughout the day. As of the close, the implied volatility of the main equity option was 33.16%, and the 90-day historical volatility of crude oil futures was 39.76%, which was lower than the historical volatility. "the volatility of crude oil options is smiling as a whole, the implied volatility of real and imaginary options is high, and the implied volatility of equal options is low, but the overall difference is not big." She said that from the perspective of the term structure of volatility, the volatility of crude oil options is near high and far low, indicating that the short-term uncertainty of the market is high and the long-term uncertainty is low.

For investors, Yang an said that crude oil options traded on the floor have a highly transparent, open, fair and fair trading environment, providing investors with a very efficient trading tool. For industrial customers, crude oil options can reduce some of the intermediate costs of their participation in hedging; for institutional customers, it enriches their investment allocation strategy; for ordinary investors, there is also one more transaction choice.

Jin Xiao also believes that for the real industry, the rational use of crude oil options can meet the more refined risk management needs of enterprises. For financial institutions, crude oil options can help them to achieve more diversified and flexible asset allocation portfolio on the basis of crude oil futures. "with the gradual maturity of the domestic crude oil futures market, the crude oil options market will be an institution-based market in the future." He said.

Yang an said that in the future, a large number of upstream and downstream customers of the crude oil industry will participate in the market. "the introduction of crude oil options, to a large extent, is to meet the actual needs of customers in China's crude oil industry. With the deepening of the understanding of upstream and downstream customers in the domestic crude oil industry in risk management, only the use of crude oil futures management risk can no longer meet the risk management needs of oil-related enterprises." He said that listed crude oil options will help to improve the efficiency of price discovery, form a more reasonable pricing mechanism, and provide flexible and effective risk management tools for enterprises in the upper and lower reaches of the industrial chain.

For the future, Jin Xiao believes that crude oil option investors need to pay attention to the following four aspects: the change of the absolute value of oil price, the change of the relative value of SC crude oil to Brent crude oil, the change of SC crude oil price volatility and the liquidity limitation of the option itself.

In this regard, Yang an said that investors should understand the process of investor appropriateness of crude oil futures. Crude oil futures and options belong to relatively special investment varieties. Investors should not only be familiar with the relevant knowledge of options trading and understand the characteristics of contract rules. We should also have a corresponding understanding of the crude oil market. As a variety with obvious international characteristics, the influencing factors of crude oil options are more complex than ordinary commodities, so investors must do their homework before participating and participate under the premise of controlling the risk.