Stock Options
Stock OptionStock Option Commission low as $0

Concept of option

Options are a right with deadline. The buyer pays an option premium for the rights granted by the contract. The seller earns the premium for the obligation to honour the contracts.

Stock options’buyer and seller:


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

 

Buyer(holder)-- have rights but no obligation to exercise on or before the expiration date.
Seller(writer)---are obliged to honour the contracts if the holders choose to exercise.

Types of Options:

There are two types of stock options:

(Call Option)

short 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

Put Option

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 contract. The buyer has the right, but not the obligation, to buy or sell the underlying asset at predetermined price on or by a predetermined expiry date. On the other hand, the seller has the obligation to buy or sell the underlying asset at predetermined price on or by a predetermined expiry date if the buyer exercises the contract. When you long an option, the purchase price is called the premium. If you short, you receive the premium.

Exercise / Assignment

The owner of an option contract has the right to exercise it, trading the underlying asset at the strike price, called “Exercise”. An option of a seller is exercised by owner, called “Assignment”.

Open a position / Close a position

An open position means that the trader holds a certain quantity of a given financial instrument. In order to close a position, the position must be bought or sold back to the market. So to close a long position, traders would sell the asset back to the market. And to close a short position, the trader would buy the asset. If you bought an option, you must use a "sell to close" order, which is akin to owning a stock that you then sell back into the market, in order to close out the position.

Characteristics of Stock Options

Flexible investment strategy

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

Hedging with options

Investors can restrict the downside while enjoying the full upside by hedging the underlying assets with options.

Leverage the return

Stock option is derivative, which leverages the investment return.

Low Transaction Fee

The transaction fee for stock option is cheaper than that for the same amount of stocks. Besides, stamp duty is exempted for stock option.

Stock Option

Phillip is one of the earliest option brokers in Hong Kong, engaging in stock option business over ten years, even the first broker to develop the electronic trading platform in Hong Kong. Nowadays, Phillip is still the market marker for the stock option of Tracker Fund (2800), responsible to offer a certain amount of quotes in order to maintain the liquidity in the market. Through the experience of the development in stock option business, our experienced option dealers can assist clients to trade and answer enquires from clients. Moreover, Phillip developed an electronic trading platform for stock option – OATS, which provides a comprehensive service of online trading and real time quote. Besides, Phillip offers a lot of stock option courses, taught by our senior dealers, for clients to learn about our trading platform and option analysis so as to grab the investment opportunities.

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.
Professional Lectures and Workshops – Option group teaching
Phillip offers several stock option lectures and workshops to our investors in which investors can learn about the basic knowledge of option and the related investment strategies, such as combination of options and stock and practical tips for trading options.
option strategy Weekly analysis – option commentaries
Weekly option focus and analysis for deploying the investment strategies
excelrt Excel RealTime automatic trading system, 30-Day free trial
Excel RealTime quotation and trading system, accompanied with Microsoft ® Excel, provides a lot of functions to investors, such as risk data calculation, real time data quotation, automatic trading, etc. For details, please visit http://www.poems.com.hk/zh-hk/phillip-apps/excel-realtime/ http://www.poems.com.hk/zh-hk/phillip-apps/excel-realtime/
查詢請電 股票期權部 22776622 或 電郵至 option@phillip.com.hk 聯絡我們


 

本公司保留更改有關條款及細則之權利,恕不另行通知。如有任何爭議, 本公司擁有最終和不可推翻的決定權。

投資涉及風險,請參閱本公司www.poems.com.hk網頁內的〔風險披露聲明〕。

Features

  • 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

Example

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 > $100,000(Net equity requirement is as low as $50,000 in the promotion period*)

*Promotion is valid until 31/12/2019

Account Opening

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

Click here to download

Author

股票期權部 (Options)
輝立証券

Phone:
852 2277 6622

匯豐 期權策略

Wednesday, October 28, 2020 Views5775

匯豐,可以說是經過了最輝煌的時刻,現在竟然會淪落到如此的田地,我相信好多人幾年前也不會像想到匯豐會跌到$30以下。但在現在的情況下,我們又能有什麼準備。

 

派息

匯豐在昨天27號發布了季績,可以說是充滿了驚喜,更是讓很多投資者看到了一些希望。在派息上面,官方也宣布了會有大機會恢復一年一次的派息,雖然之前一年可以派四次息,但其實在這樣的一個田地,對於投資者已經是大增信心,當然派一次好過一次都不派。其實這次匯豐是藉著這次機會向公眾表達了一個訊息,就是不是他們不想派,而是監管機構不給派。現在英國的監管機構可以說是開了綠燈。其實如果細心察看,我們可以發現其實匯豐是沒有較大的投資者,最大的事平保,所以很多投資者對於息率的供求是很大的。英國的方面,很多的報導也說過如果匯豐要恢復派息,一級資本市場的比例至少需要去到13%,而現在其實已經早早超過此水平。

 

業績

匯豐在昨天也發布了季度的季稅前獲利。第三季為31億美元,相對於第二季度的48億美元下跌了大概35%。但其實這樣的一個結果已經是高過很多的大行預期,市場上面的態度也是屬於正面的。更加值得一提的是預計的壞賬與損失。季度的壞賬損失為差不多為8億,相比上一季度的壞賬(30億以上)有所減少。這會是市場上大家都期待著的消息,代表著市場的最壞時段已經過去了,經濟也開始復甦了,加上匯豐全球的裁員,對於公司本身也有消減成本的作用。

 

長線分析

現在股價雖然說是有一段的升幅,但如果長線來說,其實不定的因素還有很多。匯豐到底還能不能持續盈利,加上最近的低息環境,暫時還看不見短期內可以回升的跡象,這個在將來的一段時間可能會使局限匯豐派息的因素。另外一件可以跟大家說以下的就是匯豐身為一家國際性銀行的地位。匯豐,可以說是一家英國銀行。而在國際性的一些問題下也會受到影響。中美的關係持續的惡化,也挑戰到了匯豐的地位。匯豐需要跟英國的監管局,中方的監管局以及國際上面的監管局做交道,如果中美關係持續的惡化,可能會影響匯豐在國際上面的運作。再有的是英國脫歐的方案,到底英國能不能在12月正式脫歐,現在還有這個疑問存在,如果能夠順利脫歐,這對於匯豐也會意味著什麼?最後還有的就是美國過的經濟刺激方案,而這會對全球的經濟有影響,但美國那邊遲遲沒有商討好,增加更多的不定因素。

 

重組方案

外界也有預測,2月業績發布的時候,也會順勢提供重組的方案,也考慮到會不會把亞洲的業務分拆出來。如果分拆了出來最主要看的也是派息的方面,這樣就不需要跟英國的金管局做交代,派息上面也許可以恢復以前的頻率。但我們反過來看一看,如果以整個匯豐來看,亞洲的業務是不賺錢,反而歐洲的業務開始從虧轉盈。以報告中來看,稅前收入為30億,而其實亞洲的業務收入是已經佔了一大部分,如果真的分拆出來,匯豐總的業務,或者其他業務能不能跑出成績

 

基本看法

報告有驚喜而基本因素也抱有正面的態度,但基於未來一段時間的不定因素過多,公司本身的狀況不算穩定,相信需要進一步的利好消息或方案來推高股價。股價本身上看有空間,但上方蟹貨阻力大,還要等進一步的消息。

進取的投資者可以目標上方的100天線:$34.32

如果股價能在近期靠穩有機會站在50天線上面:$31.94

如果股價跌穿50天線,很大機會靠穩之前徘徊的位置:$30

 

 

期權策略

其實說了那麼多,簡單概括就是現在買入匯豐可能太多的賭博成分,短期內可能會有升幅,但要在繼續往上走就需要在進一步的消息。

 

反而在這種得情況下一些投資工具比如期權可能會更加適合這樣的情況。所以,基本層面上我們會看短期的較短升幅,但上望的目標價不會設太遠。這種情況下可能短倉的期權會更加合適,會推薦做短倉的認沽期權。就算短期內升的不會太多,我們開倉時也能夠收取期權金,就算當股價真的往下跌,我們依舊能持著正股,目標短期的波幅,或者期待著2月時公佈的業績。

以這樣的思路,我們可以推薦沽出11月$32的認沽期權

11月$32的認沽期權:開倉時收取$0.94(每股);$376(每張)

假如價格跌穿$32,將會可能以$32接貨。

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.

Reporting Levels and Positions Limits

Where Clients hold open position in Stock Options contracts exceeding a certain level, our Company shall report such holding to the Exchange. Additionally, Clients may not hold positions that exceed the position limits.

For specifics regarding reporting levels and position limits, please refer to the link below:

https://www.hkex.com.hk/Services/Trading/Derivatives/Overview/Trading-Mechanism/Large-Open-Positions-and-Position-Limits?sc_lang=zh-HK#excess

Other fees

Commission

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

HKEx trading tariff

Tier 1: $3

Tier 2: $1

Tier 3: $0.5

Example:

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

Settlement

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 stocks to their option account for covered call before 3:30 p.m. on day T.

Remarks : Margin requirements 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 4:30 pm.

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

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 Option market is using the market maker system and market makers have the following responsibilities to maintain market liquidity include:

  • Maintain certain amount of price quote : Bid/Ask
  • Provide price quote after receiving price quotation request

Trading Highlights

  • Stock Option is US style option, which can exercise before expiry date
  • Underlying share settlement (Non-Cash)
  • Option T+1 trading settlement
  • The expiry date of each month is on the 2nd last trading day of that month

Related Links

Stock Option and Warrant

 

Recently, derivative products have become more popular in Hong Kong. Its trading volume continues to increase and Hong Kong is even the largest derivative market in the world. Today, we will introduce two of those derivative products – stock option and warrant and compare their characteristics and differences between them.

Comparison table:

 

  Stock Option (股票期權) Warrant (認股證)
Issuer HK Stock Exchange Specific Issuer
Clearing Guaranteed by the HK Stock Exchange No
Strategy Long & Short Long only
Strike price Various selections One strike price designated by Issuer
Expiry Date Various selections One expiry date designated by Issuer
Market Maker More than one One market maker for each specific warrant

 

From the table above, it shows that trading stock option is more flexible because stock option has more choices with different expiry dates and strike prices. Stock option is also guaranteed by the HK Stock Exchange.

Example

Refer to an example on 11/12/2018

  Stock Option Warrant
Contract HKX 235.00A9 #28002 [JP-HKEX@EC1901B]
Issuer HKEx JP
Strike price HK$235 HK$234.04
Expiry date 1/30/2019  2019-01-25
Price HK$4.98 HK$0.07
    Conversion unit
($0.067 x 100 = HK$6.7)
Trading unit 100 10000

*Source: 11/12/2018, #388 HKD$227

From the table above, it shows that trading stock option is more flexible because stock option has more choices with different expiry dates and strike prices. Stock option is also guaranteed by the HK Stock Exchange.

Transaction Charges

From the table above, buying a warrant is similar to buying a stock option, but the price of stock option is lower than the price of warrant, so it is better to buy a stock option instead of a warrant.

 

Stock Option (股票期權) Warrant (認股証)
1. $10/lot (For Long Open less than 10 lots) 2. Maximum commission is $30000
0.25% of turnover (min $100)  

 

Reminder: transaction charges are subject to relevant terms. For details, please refer to Schedule of Fees and Charges for Services for Stock Option or contact Stock Option department by 2277 6622.

 

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.

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
  • Stock Options is US style options, it can exercise before its expire
  • Underlying shares settlements (Non-Cash) 
  • T+1 trading settlements
  • 每一張股票期權合約代表1手正股股數
  • Each month’s expiry date is on the 2nd last trading day of each month
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Stock Options Department
Tel : (852) 2277 6622
Email : option@phillip.com.hk

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