Dr. hottest copper tastes the first taste of indus

2022-07-27
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"Dr. copper" tasted the "first soup" of industrial floor options

the first domestic industrial floor option product - Copper options will be launched on September 21. According to the analysis of insiders, with the listing of copper options, the domestic copper derivatives market will be further improved, which is conducive to enriching enterprise risk management methods. However, compared with foreign countries, the domestic financial derivatives market is not very mature and perfect, and many enterprises and investors are not very familiar with the use of options, so it is still necessary to continue to strengthen investor education

China welcomes the first industrial floor option

copper option is the first industrial floor option in China

"we have been looking forward to the launch of copper options." Jingchuan, chief economist of CUHK futures, told China Securities Journal that from the perspective of market environment, the development of copper futures and spot market is relatively mature, and it is desirable to launch copper option products on this basis

over the years, China's refined copper production, processing and consumption have always ranked first in the world, with many participating enterprises and strong demand for risk management. Since the launch of Shanghai copper futures, the market function has played well, and it has the characteristics of large market scale, good contract continuity and liquidity, and relatively mature investor structure

liquid filtration

data show that in the first half of 2018, the unilateral trading volume of copper futures in the previous period exchange was 24.9433 million hands, the transaction amount was 6.51 trillion yuan, the daily average unilateral position was 386700 hands, and the position of corporate customers accounted for 64.42%. At the same time, China's copper futures hedging effectiveness index has been higher than 97% for a long time, which better meets the enterprise hedging and other risk management needs, has strong international competitiveness, and escorts the market-oriented resource allocation and international competition of the non-ferrous industry

as an important tool for risk management, options can further meet and enrich the hedging and other risk management needs of the futures market. Therefore, options based on copper futures are also one of the most popular varieties in the futures market

on August 9 this year, the exchange issued copper option contracts and relevant rules, including the cathode copper option contracts of Shanghai Futures Exchange (Exposure Draft), the administrative measures of Shanghai futures exchange for Option Trading (Exposure Draft), the administrative measures of Shanghai futures exchange for option market makers (such as the exposure draft for comments that cannot form a deep interface dispersion and mechanical interlock) Amendments to the administrative measures for the appropriateness of option investors of Shanghai Futures Exchange (Exposure Draft) and other supporting implementation rules. Since late May this year, the last stock exchange has carried out simulation trading of copper futures options

the relevant person in charge of the previous period exchange said that the previous period exchange had made sufficient and comprehensive preparations for the listing of copper options. First, adhere to the combination of international standards and local advantages, and scientifically design copper option contract rules; Second, we made full market research, visited customers of the copper industry chain, futures companies, exchanges and other institutions, and widely listened to the opinions and suggestions of all parties; Third, actively carry out multi-level and diversified market training and investor education, and hold several market training sessions on copper option contract rules in Beijing, Shanghai and Shenzhen, so that market investors can be familiar with the contract rules; Fourth, complete the technical preparations for the listing and trading of copper options, and carry out a large number of technical tests and simulation competitions in the early stage

enriching the enterprise risk management tool

listed copper options is of great significance for promoting the risk management level of China's non-ferrous metal industry and improving the futures market's function of serving the development of the real economy

Jingchuan said that in foreign markets, the tools of copper spot market have been relatively complete. The finalization and listing of copper options this time will help improve the integrity of domestic pricing tools. Copper options can play an "insurance" role in risk management or investment

LAN min, senior researcher of options at Zheshang Futures Research Center, said that physical enterprises face risk management needs in terms of procurement, sales and inventory management in their daily operations. As the economy becomes more and more developed, enterprises' management methods become more and more flexible, and the price risk they face is no longer a simple change in direction, but more complex non-linear relationships. Therefore, they often face the problem of business decision-making. After the listing of copper options, it will provide more flexible and convenient risk aversion tools for real industry customers, and the functions of futures market to serve entities will be superimposed. In most cases, it can make up for the difficulties of enterprise decision-making, make the use of funds more efficient, and make enterprise risk management more flexible

taking inventory hedging as an example, option portfolio can not only reduce capital occupation, but also more effectively preserve inventory. In terms of methods, call options can be bought, call options can be sold, call options can be sold, and put options can be bought

"the listing of copper options makes copper pricing more reasonable and accurate, which is conducive to improving China's copper pricing power in the world financial market." Meierya futures analyst zhengfeifan said that compared with futures, options have the characteristics of lower cost, more diversified operation and easier risk control. Therefore, the listing of options indicates that the liquidity of copper futures market will be further strengthened, which makes the copper price tend to a more reasonable range

however, zhengfeifan also pointed out that the domestic financial derivatives market is not very mature compared with foreign countries, and many enterprises and investors are not very familiar with the use of options. To make good use of the copper option tool, we must first understand the risk and complexity of the option itself. For example, we can rely on professional platforms such as the last futures exchange and futures companies to learn the rules or concepts of option trading

the prospect of the option market is promising

insiders said that due to the high maturity and large scale of the copper futures market, listed copper options will bring more opportunities for domestic investors to accumulate experience

it is worth mentioning that copper options have enriched the diversity of domestic option contracts in terms of contract design. For example, in terms of exercise methods, copper options are the first to adopt European options

"European options are adopted for the exercise of copper options, mainly to meet the needs of a large number of industrial customers. Although the soybean meal and sugar options that have been listed now adopt the exercise method of American options, in practical application, the vast majority of investors and industrial customers will choose to exercise near the exercise date, and the probability of early exercise is small, because the early exercise will give up the possibility of price fluctuation, and the income cost ratio is not high 。” Zhengfeifan said that another advantage of adopting European options is that investors and industrial customers can better formulate trading strategies

with the gradual maturity of the domestic futures derivatives market, options have gradually attracted the attention of investors. At present, the existing domestic floor options include SSE 50ETF option, soybean meal futures option and sugar futures option. After the copper option is added, the number of options in the floor will increase to 4, and cotton options and other options are expected to be listed in the future

a number of insiders interviewed by China Securities Journal said that although the overall number of options is still limited to being abandoned compared with the types of futures contracts, China has recognized the important role of option products, and the pace of variety recommendation will be faster and faster

"for the whole market, options will make the pricing system more perfect. In the absence of options, some enterprises will encounter greater risks when using futures for risk management due to improper use, but the insurance like attribute of options can effectively solve this problem." Jingchuan said

LAN min believes that for China's futures companies and other financial market institutions, options are not only a simple and easy hedging tool in function, but also the most commonly used basic component for institutions to carry out financial innovation. Its launch not only creates a new field for financial institutions such as futures companies to carry out business innovation, but also helps to create a financial ecological environment with diversified financial products and multi-level competition mode, thus promoting the overall innovation of the capital market

in addition, for individual investors, options can not only become a hedging tool to realize asset allocation at a lower cost and avoid the existing asset investment risk. Operators need to carefully remove dust and clean the equipment. They can also form different risk and income combinations according to different market conditions through diversified combinations of call options and put options with different exercise prices or maturity dates, Achieve the purpose of personalized investment

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