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All expand | All closedGeneral Questions
1. What is stock 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 honor the contracts.
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 honor the contracts if the holders choose to exercise.
Stock option is US style option, which can exercise before expiry date
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 honor the contracts if the holders choose to exercise.
Stock option is US style option, which can exercise before expiry date
2. How many types of stock option?
There are two types of stock options: Call Option and Put Option
Call Option: give the buyer the right to buy the underlying asset at the strike price
Put Option: give the buyer the right to sell the underlying asset at the strike price
Call Option: give the buyer the right to buy the underlying asset at the strike price
Put Option: give the buyer the right to sell the underlying asset at the strike price
3. What is open position? What is close 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.
To close a long position, traders would sell the asset back to the market.
To close a short position, the trader would buy the asset.
To close a long position, traders would sell the asset back to the market.
To close a short position, the trader would buy the asset.
4. Is there any margin requirement for stock option?
If clients are option buyer, they only need to pay the premium without any margin requirement.
If clients are option seller, they can receive the premium. At the same time, they must deposit enough margin requirement for opening position. Option contracts with different strike prices and expiry months have different margin requirement. Clients can refer to the margin requirement table in HKEX website. In case of conflict between the HKEx web site and the option statement, option statements shall prevail.
If clients are option seller, they can receive the premium. At the same time, they must deposit enough margin requirement for opening position. Option contracts with different strike prices and expiry months have different margin requirement. Clients can refer to the margin requirement table in HKEX website. In case of conflict between the HKEx web site and the option statement, option statements shall prevail.
5. What is 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”
6. How to exercise the stock option in position?
If clients would like to exercise their stock options, then please contact Stock Options Department at (852) 2277 6622 before 4:30 pm.
Open options contracts, which are 1.5% or more in-the-money upon expiration, will be automatically exercised if there are no prior overriding instructions from the broker.
Open options contracts, which are 1.5% or more in-the-money upon expiration, will be automatically exercised if there are no prior overriding instructions from the broker.
