Polysilicon Options Service Promises a Bright Future for the Silicon Industry

Following the listing of polysilicon futures on the Guangzhou Futures Exchange on December 26, polysilicon options were officially launched for trading on December 27. The first batch of listed contracts is based on PS2506, PS2507, PS2508, PS2509, PS2510, PS2511, and PS2512 futures contracts, with trading hours consistent with those of polysilicon futures contracts. According to the trading performance of polysilicon futures on December 26, polysilicon options debuted with seven series, totaling 178 contracts.

First-Day Performance Meets Market Expectations

Market participants stated that the first-day trading of polysilicon options was stable, with reasonable pricing and effective linkage to the underlying futures, meeting market expectations. Data shows that as of the close of the first trading day, the total trading volume of all polysilicon option contracts was approximately 14,700 lots, including about 7,600 lots of put options and 7,100 lots of call options, with a trading volume PCR (put-to-call ratio) of 108%.

From the perspective of contracts with different expiration dates and strike prices, the near-month options expiring on May 12, 2025, saw the highest trading volume in the most out-of-the-money options. The near-month put option with a strike price of 37,000 yuan/mt recorded the highest trading volume and open interest among all contracts. In terms of volatility, as of the close of the day, the implied volatility of near-month polysilicon option contracts was approximately 21.3%, slightly below the median level of historical volatility for spot prices over the same period, and close to the implied volatility of near-month silicon metal options.

Zhang Yin, an analyst at Guotai Junan Futures, told a Futures Daily reporter that the implied volatility of call option contracts in polysilicon options was relatively higher, with a positively skewed volatility curve, reflecting a certain bullish sentiment in the short term. Additionally, the pricing trend has been consistent with the 8.7% increase in polysilicon futures prices from their listing prices. The synthetic futures prices derived from options were also close to the underlying futures prices, demonstrating the pricing efficiency of polysilicon options.

Discussing the fundamentals of polysilicon, Shen Zhuofei, a senior analyst at Guotou Futures Research Institute, noted that significant short-term improvements are unlikely, and futures prices are expected to fluctuate widely around cost levels. Since the listing prices of futures were lower than current spot prices and the initial option contracts have relatively long expiration periods, if short-term prices rise, buying put options for short hedging could be considered. If volatility is high, selling wide-strike straddle strategies could also be an option.

Industry Enterprises Gain More Flexible Hedging Tools

Industry insiders believe that as a major producer and consumer of polysilicon, the listing of polysilicon futures and options in China is of great significance for enhancing the comprehensive competitiveness of China's PV industry in the international market.

"Especially as enterprises enter a stage of high-quality development, the flexible and diversified hedging methods provided by options can better meet the personalized price risk management needs of enterprises," Shen Zhuofei stated. For the polysilicon industry, the listing of polysilicon futures and options plays a positive role in price discovery and mitigating abnormal market fluctuations. Moreover, the unique perspective of implied volatility offered by options provides a window for discovering and predicting market price fluctuations, which other financial instruments do not possess.

"Polysilicon options provide enterprises with more flexible hedging tools. Compared to futures contracts, options can further optimize enterprises' risk management strategies," Zhang Yin commented. In the current market environment with relatively low volatility, polysilicon producers can use put options to protect inventory value. During periods of significant market volatility, they can not only avoid losses caused by price declines but also benefit from price appreciation by retaining inventory. Similarly, downstream purchasing enterprises can use call options to lock in procurement costs.

Additionally, the Guangzhou Futures Exchange offers a variety of margin discount policies for combination strategies, significantly reducing enterprises' capital requirements.

"The introduction of polysilicon options will enable enterprises to participate more fully in market competition and promote the establishment of a fair and equitable price formation mechanism in the polysilicon market," Zhang Yin explained. By purchasing options, enterprises only need to pay the premium to enjoy price protection, which can reduce short-term capital pressure. Furthermore, the large number of option contracts allows enterprises to flexibly design exposures based on their needs, avoiding opportunity costs caused by excessive hedging. Enterprises can also manage risks in spot trading by selling options or constructing option combinations. By locking in spot sales prices and procurement costs through option strategies, industrial enterprises will gain a more advantageous position in negotiations with upstream and downstream clients.

Market Holds High Expectations for Polysilicon Options' Role

The launch of polysilicon options has been highly recognized by the crystalline silicon PV industry, with the market holding high expectations for the role of polysilicon options in serving the industry.

As a leading commodity supply chain enterprise, Xiamen Xiangyu New Energy had made thorough preparations for the listing of polysilicon futures and options. According to Zheng Minmin, Assistant General Manager of Xiamen Xiangyu New Energy, the company established a professional derivatives business department responsible for strategy formulation, operations, and daily management. Through multiple internal training sessions and discussions, the team enhanced its understanding of options products and operational skills, strengthening risk awareness and compliance concepts. Meanwhile, the company's polysilicon production and research team conducted in-depth analyses of the dynamic developments in the polysilicon market, providing a solid data foundation for the operation and risk assessment of polysilicon derivatives.

Zheng Minmin noted that the liquidity of polysilicon options on the first day of listing was relatively sufficient. In the future, the company plans to actively use option tools in combination with customer needs to offer various rights-inclusive trade solutions, such as cumulative purchase/sale, delayed pricing, and enhanced pricing, to meet the diverse needs of industrial clients.

"The listing of polysilicon options further improves the risk management framework of the PV industry chain, promoting collaborative development and cooperation among industrial clients," Zheng Minmin stated. From an industry perspective, the polysilicon options introduced by the Guangzhou Futures Exchange provide industrial clients with more precise and diversified price risk management tools. These tools enable them to flexibly respond to price fluctuations in a complex and volatile market environment, optimize resource allocation, and assist enterprises in achieving more efficient decision-making in cost control and production planning. This, in turn, further consolidates and enhances their market position and competitive advantage within the industry, leading the industry toward a new stage of high-quality development.

Zhang Lingjun, Deputy General Manager of Wuchan Zhongda Capital Co., Ltd., also believes that the listing of polysilicon options provides upstream and downstream enterprises in the polysilicon industry with a new risk management tool. On one hand, enterprises can use option tools for risk management to lock in prices and maintain stable processing profits. On the other hand, compared to futures tools, options eliminate the pressure of margin calls, benefiting capital management. Additionally, the reasonable use of option tools by industrial enterprises to manage risks enhances their ability to withstand risks and operate steadily, contributing to enterprise value management and further reducing financing costs.