Stock Options

Stock options’buyer and seller

Investors can choose LONG (buy) or SHORT (sell) stock options.

  • Buyers (holders)--have rights but no obligation to exercise on or before the expiration date.
  • Sellers (writers)--are obliged to honour the contracts if the holders choose to exercise.

Types of Options:

There are two types of stock options:

Call Option

Long Call      Short Call

Example: Stock A (October) at $90 strike price
Holder has rights to buy the stock at $90 (strike price) on or before October Expect rising of stock price
Writer is obliged to sell the stock at $90 if the holder exercises the contract Expect not rising of stock price

Long Put      Short Put

Example: Stock B (October) at $20 strike price
Holder has rights to sell the stock at $20 (strike price) on or before October Expect falling of stock price
Writer is obliged to buy the stock at $20 if the holder exercises the contract Expect not falling of stock price

Stock option is a contract entered by and shared between two parties, a buyer and a seller. Everyone can long(buy) or short(sell). The buyer has the right, but not the obligation, to trade an underlying asset with the seller at predetermined price, within a certain time.When you long an option, the purchase price is called the premium. If you short, you receive the premium.

Characteristics of stock options

Stock options can assist investors to make profits in bullish, bearish or stagnant markets.

Investors can use options to hedge market risks.


Stock option is derivative, which can act as a leverage investment return.

Low transaction cost

Stamp duty for stock option does not need to be paid.

Stock Option

Hong Kong's stock options market is becoming more active in Hong Kong. With the increasing no. of option trading participants, stock options become a popular derivatives products other than the underlying shares. Stock Options can be traded during different market situations: under quiet, bull or bear markets. The flexibility of stock options can help to enhance your trading portfolio value.

Stock Option Features:
  • Receive Option premium and earn time value
  • Lower equity holding costs
  • Take full advantage of leverage effect
  • Hedging against the underlying shares
  • Lower initial investment cost

Phillip Securities (HK) Ltd. is one of the earliest stock options brokers, we engaged in options business for more than a decade. We are also market pioneer in our self-developed electronic stock option trading system. Currently, we are the market maker of the Tracker Fund (#2800). Being the market marker, our responsibility is to provide a certain number of price quotes in order to maintain market liquidity. With our decades of options experiences, our dealers/representatives can provide comprehensive options trading services to our clients. 

Options Advanced Trading System (OATS) is our self-developed electronic trading platform. OATS provide a comprehensive coverage of online trading and real-time option price quotes. Our experienced dealer offer monthly options courses regarding  OATS ‘s trading system and other options knowledges for our clients to capture market opportunities.

Options Advanced Trading System OATS

OATS OATS.NET electronic stock options trading platform is a platform our self-developed platform that offers comprehensive online business transactions, real-time quotes, options price quotations and order price alternation functions. Action now and apply immediately to experience our professional online stock option trading services.
  • Instant Price Quote Service
  • Contracts Transactions Record
  • Profit & Loss 
  • Options position view
  • Instant Dow Jones News
  • Options Delta and Implied Volatility information
POEMS Phillip offer online options trading services to our clients. Clients can trade options online via our POEMS system without additional installation of any software program once clients applied the online trading platform.
  • Conduct options price quote directly to market makers 
  • Direct access to the HKEx’s trading system
  • Free options price quote – 5 price depth and quantities
Mobile We offer Mobile Apps for options trading exclusively, no matter where you are, where you in. You can also smartphone for trading anytime, anywhere.
  • Flexible and comfortable, no matter where you are, where you in, you can also use the smartphone to trade anytime, anywhere.
  • Easy and user friendly, trades are easier than ever before. Now, even if you have been outside, you can use mobile phones to obtain information to trade.
  • Safe and reliable, - using sophisticated wireless encryption technology, POEMS Mobile to ensure your transactions in a safe and secure environment.
Professional Phillip Securities (HK) Ltd. is one of the earliest stock options brokers, we engaged in options business for more than a decade. Our experienced dealers/representatives can understand the clients’ needs and provide related customer services.

Seminars and workshops –Option workshops

We offer monthly workshops and mini-seminar for options information introduction.  From the basic concept, the option + equity portfolio, as well as individual studies and practical classes are readily available.

Option Group Teaching

Weekly Analysis - Option Commentaries

Option weekly focus and analysis!

Option Commentaries
查詢請電 股票期權部 22776622 或 電郵至 聯絡我們


  • Margin requirement was lower and calculated based on hedging method. Better fund utilization for different trading strategies can be achieved.
  • Actual market risk can be reflected from the hedging profile
  • Margin requirements real time update on OATS
  • Free

3 Popular hedging strategies

『Hedge account』 is for sophisticated investors for setting different trading portfolios’ combination. 3 popular hedging strategies includes :
  1. Bull/bear,call/put spread
  2. Straddle/strangle
  3. Butterfly/condor


Bull put spread

  • Short #1, $90.00, September put option @$2 
  • Long #1 $85.00, September put option @$0.75
  • Premium received : $2 - $ 0.75 = $1.25
  • Potential total loss : $90 - $85 -$1.25 = $3.75
  • Normal margin = $5,400
  • Hedge account margin = $2,470

Account opening requirements

Monthly options commission is $1,000 Or Net equity > $200,000

Account Opening

Fill in the [Options Hedge A/C Form] and return with signed original copy to Stock Option Department.

Click here to download


股票期權部 (Options)

852 2277 6622

上週活躍成交窩輪與相關股票期權比較 (11 - 15 Feb)

Monday, February 18, 2019 Views921

代號 窩輪 行使價 到期日 收市價 近似之股票期權 行使價 到期日 收市價 較窩輪價折讓(%)
18480 騰訊瑞銀九五購F 370.2 24/5/2019 0.078 TCH370.00E9 370 30/5/2019 7.66 2%
13102 騰訊中銀九五購B 370.2 31/5/2019 0.085 TCH370.00E9 370 30/5/2019 7.66 10%
23933 騰訊瑞信九六購L 394.2 24/6/2019 0.055 TCH400.00F9 400 27/6/2019 4.56 17%
24025 騰訊法興九六購G 389.08 25/6/2019 0.071 TCH390.00F9 390 27/6/2019 5.96 16%
23710 騰訊中銀九六沽F 316.68 18/6/2019 0.167 TCH320.00R9 320 27/6/2019 16 4%
16416 騰訊摩通九六購C 389.08 25/6/2019 0.067 TCH390.00F9 390 27/6/2019 5.96 11%
16349 騰訊摩通九四沽L 307.83 23/4/2019 0.074 TCH310.00P9 310 29/4/2019 6.66 10%
17215 騰訊瑞信九五沽P 298.78 24/5/2019 0.089 TCH300.00Q9 300 30/5/2019 6.73 24%
16261 騰訊摩通九五購I 370 24/5/2019 0.08 TCH370.00E9 370 30/5/2019 7.66 4%
25017 港交瑞信九六購A 268.2 25/6/2019 0.079 HEX270.00F9 270 27/6/2019 6.85 13%

Risk disclosure statement and disclaimers of Trading Futures and Options
The risk of loss in trading futures contracts or options is substantial.  In some circumstances, you may sustain losses in excess of your initial margin funds.  Placing contingent orders, such as “stop-loss” or: stop-limit” orders, will not necessarily avoid loss.  Market conditions may make it impossible to execute such orders.  There is a possibility that any stop-loss order may be cancelled by a futures exchange due to various reasons including where orders are ‘out of price limits’ during a fluctuating market.  You should closely monitor your orders, as we may be unable to contact you in the event of cancellation.  You may be called upon at short notice to deposit additional margin funds.  If the required funds are not provided within the prescribed time, your position may be liquidated.  You will remain liable for any resulting deficit in your account.  You should therefore study and understand futures contracts and options before you trade and carefully consider whether such trading is suitable in the light of your own financial position and investment objectives.  If you trade options you should inform yourself of exercise and expiration procedures and your rights and obligations upon exercise or expiry. You should study carefully the Disclosure Statements of Local Futures on our website

Account Opening

To open a stock options account, clients should:

  1. Open a margin account or cash account (Custodian) in order to open a stock options account.
    For more details please click here
  2. Enable the POEMS (online trading platform) in order to trade stock options online

Margin Requirement

Clients can receive a premium when they short call or put. When doing so, they must deposit enough money to fulfill the margin requirement.

There are different margin requirements for option contracts with different strike price and expiry date. The margin requirement can be found out from the HKEx web site Client Margin Estimate Reference Table. In case of conflict between the HKEx web site and the option statement, option statements shall prevail.

When there is an intra-day margin call, it is necessary for clients to deposit sufficient money into their options account within the time specified.

For Short positions, kindly remind about the contracts’ notional value (Stock value of short positions if contracts is being assigned). Additional margin requirements may require for large short position, clients may need to prepare additional cash as margin requirements for risk control. For details, please contact us.

Other fees


premium x number of shares x 0.25% (min. $100)

HKEx trading tariff

$3 for Tier 1,$1 for Tier 2


Long 5 lots (2000 shares), HSBC, strike $90, November call, premium $0.7

Premium = 0.7 x 2,000 = $1400

Commission = $100

Trading tariff =5 x $3=$15

Total cost =$1400+$100+$15=$1515


The settlement day for stock options is T+1: clients must deposit sufficient margin on day T. Otherwise, the following action could be done to clients without notification.

  1. Stop allowing clients to open positions.
  2. Closing of the clients’ position.
  3. Buying or selling the underlying stock for option assignment.

Clients have to transfer their stock to their options account for the cover call at day T.

Remarks : Margin requirments varies according to the shares price changes, final margin refer to the day-end stock option statement

Exercise and Assign

If clients would like to exercise their stock options, then please contact Stock Options Department at (852) 2277 6622 before 4:30pm.

If contracts are exercised/ assigned from selling stocks which clients do not own, clients are required to buyback the stock by T+1.

Market Myth

Myth 1: Short Options have infinite risks ?

Answer:  In general, short options are associated with huge or infinite risks. This concept is theoretically correct as the prices of the options’ underlying shares may fall or rise to infinite zero. However, this may not be realistic as there were a hypothesis---You do not make any cut loss action.

Disregarding investors can choose stock options of some blue chips or state-owned enterprises such as PetroChina or HSBC etc. Even if the stock price fell to zero, the stock you are holding is still worthless. But will you wait until the stock dropped to zero before the loss cutting it?

Because of the options’ leverage effect, most traders will abuse the leverage effects and expose themselves for huge risks. In fact, if traded options with proper manner and proper risk management, strictly conduct loss cutting procedures, options is not as general as investors imagined danger.

Myth 2: Short options being assigned need to force buy-in or sell the underlying shares. But I do not have sufficient fund associated.

Answer: Most retail investors may not be able to have 100% of funds at any time ready to buy the underlying shares (Short Put assigned for force buy-in shares at the exercise price),but investorscan sell the shares on the day being short put assigned, and the loss is just the gap in between the selling price and exercise price.

Example:Suppose HSBC price at $119, Investors A short Put current month $120 x 10 lots being short put assigned. Investors A can sell out HSBC at market price $119 after the short put assigned brought of HSBC at $120 x 10 Lots,

Actual losses: $ 120- $ 119 = $ 1 X 10 X 400 = $ 4,000.
A just need to prepare $ 4,000, instead of buying 10 hands HSBC's $ 480,000.

Risk associated is the shares prices drop rapidly after the short put assigned.Investors have to set-up cut-loss prices and apply risk control measurements.

Myth 3: Short options can be assigned anytime and with high risks ?

Answer: In general situation, short options won’t be assigned before the options expired date. Option buyers choose to exercise such options contracts will only get the profit equal to the intrinsic value of the options. If they sell the options in the market usually can achieve higher profits ( the profit comes from the options’ time value). So only a small percentage of the option contracts are assigned in advance. One reminder is : Short call options may be assigned in advance because of the dividends factor. Long options owners may exercise their option contract in advance for dividends collection. Investors have to pay attention to the relationship between the underlying shares’ ex-day and the options.

Myth 4 : Short options need to wait until the contract expiry for premium collection ?

Answer: Options premium can be received once the options were shorted. However, short options need margin deposit, if you have sufficient margin deposit, you can withdraw the option premium anytime. 

Myth 5: Short options need to wait until option expiry date for profit realization?

Answer: Most investors misunderstand that options’ profit can only be realized until holding the options till its expiry. However,investors can close position at any time before the option expiry..In general situation, the shorted options’ prices are closed to zero, that means most options premium were earned until options expired. Investors can wait until option contracts expiry Or can close position for profit realization at once.

Option market maker system

Stock Options market is using the market maker system and market makers have the following responsibilities to maintain market liquidity includes:

  • Maintain certain % of price quote : Bid/Ask
  • Provide price quote after received price quotation request

Trading highlights

  • Stock Options is US style options, it can exercise before its expire
  • Underlying shares settlements (Non-Cash) 
  • T+1 trading settlements
  • Each month’s expiry date is on the 2nd last trading day of each month

Related Links 



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