The Flexible Contract Research Of Advance Financial Business Based On Options

At present, facing the marketization of interest rate and the trend of "financial disintermediation", banks and small loans company and electric business platforms provide small and medium enterprises with flexible and convenient supply chain financing services. In financing activities, Banks generally appropriates credit funds in once time, but the enterprise’s demand for money may be less bulk more batches. The development of flexible supply chain contract allows the dealer to purchase flexibly, but it has also led to the dealer’s elastic demand of procurement fund. The current advance finance business cannot meet the dealer’s elastic demand of fund when purchase flexibly.In the supply chain including two stages of a single cycle, the supply chain management company provides dealers with advance payment financing service, which is based on options. The financing service not only meets the retailer’s procurement funds demand, but also improves the retailer’s financing flexibility. This paper set up advance financing flexible contract model, this model contain the cost of capital and the pledge regulatory costs, and aiming at the lowest cost of financing, the paper get the optimal financing strategy based upon options. Then, through establishment of comprehensive costs of exercising options, the paper analyzes dealer’s decision-making of exercise options. This paper analyzes the effect of the option contract for the participants. Finally, this paper makes sensitivity analysis by numerical example.The paper analyzes the research conclusion and makes sensitivity analysis by numerical example. In addition, the sensitivity analysis of the key parameters of financing options can provide theoretical guidance for flexible contract parameters design. Introducing the idea of options not only solve the elastic financing problem in the flexible purchasing background, but also can innovate advance financing business model.