The target of individual investors' inquiry in institutions is different every day, and they need to repeat the inquiry every day. Inquiry can start in one month, and the quotation amount of different brokers is different.
Case study of investing in off-exchange stock options
Xiaoming is optimistic about the market performance of China Ping An (60 13 18) in the next three months, and plans to build a large position in the stock, with a market value of10 million yuan. As individuals can't directly participate in off-exchange options of individual stocks at present, he chose to make an inquiry through the brokerage channel of qualified institutional investors, and learned that the cost of China Ping An's three-month flat call option is 5%.
Xiaoming only needs to pay the option fee of 500,000 yuan (10 million yuan *5%), and he can get the nominal market value of China Ping An of10 million yuan.
1. When the share price rises by 20%:
Two months later, China Ping An's share price rose by 20%. Xiao Ming believes that the stock price has become ideal and chooses to instruct qualified institutional investors to close the option contract.
At this time, Xiao Ming got a profit of 2 million yuan (10 million yuan *20%) and a net income of1500,000 yuan (2 million yuan minus the option fee of 500,000 yuan). It shows that the net profit of leverage is 3 times (1500,000 yuan/500,000 yuan).
If Xiaoming chooses to invest 500,000 yuan himself, he can only get a profit of100,000 yuan (500,000 yuan *20%).
2. The stock price fell by 20%:
Three months later, China Ping An's share price fell by 20%. Through OTC stock options, Xiao Ming's net income is 0 yuan (he can choose no option), and the cost is that the option fee is-500,000 yuan.
If Xiaoming chooses to invest with all the funds of10 million yuan, the loss will be 2 million yuan (10 million yuan *(-20%)).
This case highlights the leverage advantage of OTC stock options, which enables investors to gain more profits in the market and be more flexible in risk control.
OTC stock option participation process:
The first step is the inquiry stage.
Submit the purchase demand for specific stock options and wait for the brokerage firm to provide the quotation of option fees. The inquiry content includes but is not limited to trading time, trading target, trading direction, trading price and trading volume.
The second step, the investment stage
Once the inquiry is successful, the broker will quote the option fee for the specific stock and term. Investors need to transfer the corresponding option fee to the designated account.
The third step, the buying transaction stage.
Investors can issue buying orders through market price, limit price or interval price. The broker will reply whether the transaction is completed within 1 day. If the transaction is not completed, the option fee will be returned to the account.
The fourth step is the stage of selling exercise.
Investors can issue trading orders to sell the exercise right through market price, limit price or interval price. After the sale, the broker will inform whether the exercise is successfully reached.
Note that the exercise date of each broker is different, and some are t+ 1, which is based on t+5, so you need to ask clearly before making a decision.
The fifth step is the settlement stage.
According to the information of buying and selling liquidation, the broker will settle the bought option contract. The profit will reach the account after T+3.
The process of placing an order for OTC stock options takes some time, unlike online trading, so the trading mode of OTC stock options is still relatively primitive.
Which investors are suitable for making off-exchange options?
1. Low-level covering investors: These investors have invested a lot of money in some specific stocks, and their share prices have fallen into a low level. They firmly hold these stocks and believe that there is a rebound opportunity near the key support level. I hope to seize this rebound to balance the cost of using funds, but I am worried about market risks. In this case, using the finite risk and leverage characteristics of options can increase returns by buying call options.
2. News analysts: Such investors have access to news information, and can know in advance the major positive news of listed companies such as mergers and acquisitions, capital increase, share transfer and financial reports. They may also follow the country's industrial policies, plans and supporting documents, and have a certain ability to predict the rotation of hot sectors. The interest-free and highly leveraged nature of options allows them to use small funds to obtain large returns.
3. Hedging strategy users: investors may have customers who have securities lending business, and they are worried about the possible uncertain rebound space of a stock price, but they are not willing to give up bearish completely. In this case, they can buy the call option of the stock to pay the premium to hedge the risk. The nonlinear characteristics of risk and return of options allow investors to lock in risks in advance, and the return potential can be unlimited during the contract period.
4. dark horse shares Tracker: This kind of investors may have a set of special trading system and trading rules, which can accurately capture the signs of individual stocks before they break out. They are familiar with capital flow, trading volume, technical form, and the signs before the stock is about to skyrocket. The leverage and finite risk of options enable them to better realize their trading strategies.
5. Long-term investors: These investors judge the long-term performance of stocks through in-depth analysis. They may think that a stock is about to rebound sharply, but because of the cost of capital, they are unwilling to invest a lot of cash to wait. In this case, buying a call option with a reasonable term can effectively invest at a specific time and price level.