Research On OTC Option Business Products Of Futures Companies

In order to effectively avoid various risks in actual production and operation,enterprises often choose financial derivatives for hedging.However,although the traditional futures market can effectively avoid risks,it limits the potential profit margin and the risk of being recovered at any time.In contrast,enterprises use options to control price risk actively,and use the non-linear characteristics of options to lock in risks without locking in returns.In recent years,OTC options have developed rapidly,paving the way for the listing of OTC options in China.There are abundant options in foreign markets,and hedging of options is very common.At present,in our country,on-site option trading has just started,and the demand for option trading is increasing day by day.Off-site options are accepted by more and more enterprises at home.At the same time,the pace of enriching the variety of options on the market is getting closer and closer.The four major stock exchanges are actively carrying out the option simulation trading of related products.Before officially introducing on-the-spot commodity options,through off-the-counter commodity options trading,investors are not only familiar with options trading,but also lay the foundation for on-the-spot options listing.Based on the understanding of the development process of OTC options,this paper summarizes the development experience of OTC options at home and abroad,and analyses the necessity and feasibility of OTC options in domestic market.From the point of view of a domestic futures company,this paper analyses its coke OTC option product case.Firstly,using B-S formula to price coke OTC options,the core element of option pricing is volatility,which should be determined theoretically by the relationship between supply and demand in the market.However,in the absence of OTC options for underlying futures,the volatility of coke OTC options is determined by historical volatility.Then,the risk of option price is introduced and solved.This paper analyses how futures companies,as short options,hedge their exposure risks by using Delta hedging method.Finally,sensitivity analysis is used to determine transaction costs in actual operation.In the same period,most of the articles are from the perspective of analyzing the pricing of OTC options or how the short side of options hedges the risk.From the perspective of the freight company,the author identifies the OTC options products as the main body,and combines the pricing analysis and risk hedging analysis to show more clearly.In the process of hedging,the futures companies in short positions need to clarify the importance of position risk management.If they do not actively hedge,the short side of the options is likely to face unbearable losses because of the sharp fluctuation of the underlying asset price.For enterprises,when they need to hedge with OTC options,they should consider the holding time of the call option,the longer the holding period,and the higher the option fee.Therefore,when hedging for a long time,hedging time can be shortened,hedging times can be increased.Segmental operation can not only reduce the adverse impact of large price changes in the hedging process,but also reduce the hedging margin.Ben.Off-the-counter option business flexibly serves the real enterprise production,which is a risk management tool that the existing futures products can not provide.The practice of OTC options has also laid a solid foundation for the smooth promotion of China’s option market.2015 can be said to be the first year of China’s options,February 9,the first stock option product Shanghai 50 ETF option was officially listed,as the "first show" of domestic options products,subject to strict regulatory requirements,investors have a higher threshold,making the initial participation of individual investors less.However,it is undeniable that the advent of the option era has added new investment tools to investors.Through active risk management and diversified trading strategies,such as hedging,speculation and arbitrage with options,the two-way nature of transactions can gradually change their investment strategies.Over the past 20 years,the futures market has continuously innovated its mechanism,enriched its futures trading varieties and improved its market framework.In addition,with the rapid development of the four major futures exchanges in recent years,the market has become mature and has the market conditions for the introduction of futures options on exchanges.The promotion of commodity options not only improves the ability of traders to actively disperse market risks,but also is the only way for the development of China’s multi-level capital market.I believe that in the near future,with the gradual enrichment of options products,options will be accepted by more people.