Science and technology innovation board’s first derivative will be listed soon, which is also the first on-site option variety linked to the Science and Technology Innovation 50 Index in China. Its successful listing will achieve a breakthrough of zero ETF options in the Shanghai and science and technology innovation board markets.
The Shanghai Stock Exchange issued a notice on "Matters Related to the Listing and Trading of Kechuang 50ETF Options on Shanghai Stock Exchange" and decided to list and trade Kechuang 50ETF Options on June 5, 2023. It is understood that the Shanghai Stock Exchange will list the corresponding Huaxia Kechuang 50ETF option contract and Yifangda Kechuang 50ETF option contract according to different contract types, expiration months and exercise prices. The expiration months of the first listed option contracts are June, July, September and December 2023. According to the price setting of science and technology innovation board stock, the price parameter of Kechuang 50ETF option is adaptively adjusted to 20%.
As the first financial risk management tool listed in science and technology innovation board, Kechuang 50ETF option is highly concerned by investors. What is the significance of the launch of Kechuang 50ETF option, and what does this mean for investors?Director of quantitative investment department of Huaxia Fund and fund manager of Kechuang 50ETF(588000) were awarded.It is said to the financial sector that the launch of Kechuang 50ETF option undoubtedly provides an effective risk management tool for the market, which indicates that China’s stock option market has entered a new era of registration system and entered a "fast track" development stage. The specific positive impact can be observed from the following aspects:
First, improving the quality of science and technology innovation board market and the pricing efficiency of science and technology innovation board spot market will help to stabilize the fluctuation of science and technology innovation board spot market.
Secondly, it provides effective risk management tools for science and technology innovation board investors, helps them to manage spot risks more effectively, enriches investment strategies, enhances the attractiveness of science and technology innovation board, and thus attracts more long-term capital to flow into science and technology innovation board.
Third, provide effective risk hedging tools for market makers in science and technology innovation board, reduce the inventory risk of market makers, give full play to the functions of market makers in science and technology innovation board, and thus improve the liquidity of science and technology innovation board.
For investors, winning also suggests that it is also necessary to be cautious to participate in the trading of new options.
Take a brief look at the two upcoming listings.Kechuang 50ETF option contract varieties：
The target of Huaxia Kechuang 50ETF option contract is "Huaxia SSE science and technology innovation board 50-Component Trading Open Index Securities Investment Fund", the underlying securities are abbreviated as "Kechuang 50", the securities expansion is abbreviated as "Kechuang 50ETF", the securities code is "588000", and the fund manager is Huaxia Fund Management Co., Ltd.
The target of E Fund’s Kechuang 50ETF option contract is "E Fund SSE science and technology innovation board 50-Component Trading Open Index Securities Investment Fund", the underlying securities are abbreviated as "science and technology innovation board 50", the securities expansion is abbreviated as "Kechuang 50ETF E Fund", the securities code is "588080", and the fund manager is E Fund Management Co., Ltd.
ETF option is a complex derivative product with leverage effect, and science and technology innovation board also has certain investor suitability requirements. Individual investors should be rational when they participate in the trading of 50ETF options, enhance their awareness of risk prevention, establish a correct investment concept, and make independent investment decisions prudently according to their own judgments. The emergence of Kechuang 50ETF option represents a significant improvement of science and technology innovation board’s "Strong Kechuang" characteristics.
Since 2019, when the CSRC issued the "Implementation Opinions on Establishing science and technology innovation board and Pilot Registration System in Shanghai Stock Exchange", the introduction of science and technology innovation board and Registration System has become a major reform action to serve scientific and technological innovation enterprises, enhance market inclusiveness and strengthen market functions. The goal of science and technology innovation board is to provide services for scientific and technological innovation enterprises that are in line with the national strategy, break through key core technologies and enterprises with high market recognition. These enterprises mainly focus on the new generation of information technology, high-end equipment, new materials, new energy, energy conservation and environmental protection, biomedicine and other high-tech industries and strategic emerging industries. The existing three options of SSE 50ETF, CSI 300ETF and CSI 500ETF are mainly focused on the main board stocks, and the newly added Kechuang 50ETF option will better cover the science and technology innovation board market.
The data shows that since the establishment of science and technology innovation board in 2019, by the end of April 2023, there were 519 listed companies with a total market value of 6.65 trillion yuan, and the scientific and technological innovation attribute of the sector continued to strengthen. Of course, science and technology innovation board’s high risk and high volatility also make investors face huge investment risks. In this context, the launch of Kechuang 50ETF option undoubtedly provides an effective risk management tool for the market.
After the launch of Kechuang 50ETF option, the ETF option market will form a comprehensive coverage of risk characteristics such as blue chip, small and medium-sized market value and entrepreneurial innovation, and further improve the domestic on-site option product system. Investors can use ETF option tools to build refined risk management strategies such as index income enhancement and tail risk protection. Kechuang 50ETF option will fit different investors’ income expectations and risk preferences and match diversified wealth management needs. At the same time, investors also need to pay attention to the risk of option investment, which requires certain professional knowledge and risk management ability. Only in this way can investors make full use of Kechuang 50ETF options, achieve investment objectives and promote the sustainable development of science and technology innovation board.
According to Rong Rong, Kechuang 50ETF(588000) is the largest and most liquid index product tracking science and technology innovation board on the market at present, with the scale exceeding 65 billion yuan by the end of May. Since listing, the band features are obvious, which is in line with the characteristics of high flexibility and high fluctuation of scientific and technological innovation enterprises. It is more suitable for investors with certain investment experience to operate the band in the secondary market, and can also be used as a medium-and long-term fixed investment variety off-site.
Q&A
What is the Kechuang 50ETF option?
The Science and Technology Innovation 50ETF option of Shanghai Stock Exchange is a financial derivative launched by Shanghai Stock Exchange, which aims to provide options trading services for technological innovation 50ETF.
Kechuang 50ETF Index is a portfolio of listed companies in science and technology innovation board market, and the top 50 technological innovation companies listed in science and technology innovation board market in China constitute this portfolio. Kechuang 50ETF option is an option contract, which allows the holder to buy or sell shares of Kechuang 50ETF at a certain price on the option exercise date.
The trading unit of Kechuang 50ETF option is 100 shares, and the minimum change unit of option contract is 0.001 yuan. Option contract type: European option. European options can only be exercised on the expiration date, while American options can be exercised before or on the expiration date.
What are the top ten constituents of science and technology innovation board 50-component index?
SMIC, Jinshan Office, Zhongwei Company, Trina Solar, Lanqi Technology, Cambrian, Central Control Technology, Voice Holdings, China Resources Micro, and Western Superconductor. The proportion of the top ten is relatively average, and the main industries are manufacturing, information transmission, software and information technology services.
What are the advantages and disadvantages of Kechuang 50ETF option?
1. Don’t worry about selling your stocks too early or too late.
To provide insurance for the underlying assets held by investors, when they hold spot stocks, they have already made book profits, but they are not optimistic about the market outlook at first. When they want to avoid the risk of loss caused by falling stock prices, they can buy put options as insurance without worrying about selling their spot stocks too early or too late.
The royalties paid by investors are equivalent to the premiums paid. By the same token, when we are uncertain about the market trend, we can buy call (call) options first to avoid the risk of stepping on the air, which is equivalent to protecting the cash in hand.
2. Reduce the cost of stock purchase.
We can sell put (put) options with lower exercise price and lock in a lower purchase price for the stock (that is, the exercise price is equal to or close to the price of the stock we want to buy). If the stock price is above the exercise price at the expiration date, the option will generally not be exercised, and we can earn the royalties from selling the option. If the stock price is lower than the exercise price on the expiration date and the option is exercised, we can buy the specified stock at the exercise price originally locked, and the actual cost is reduced due to the income from royalties.
3. Options can effectively master risk control.
The nonlinear characteristics of option risk-return theoretically ensure that the income of buying options is infinite but the risk is relatively limited. Although the winning rate of the buyer who makes options is low, it is also an indisputable fact that each loss is limited to the option fee.
4. Options can increase the potential income.
When doing fund management, we usually set positions based on losses. If the unit risk is relatively large, our positions will be reduced accordingly, which will reduce our potential income space. If we use options to realize this strategy, because the maximum loss is limited to the option fee, the positions can be opened more fully accordingly, and the potential income will be larger.
Advantages of kechuang 50ETF option trading:
1. Unique profit and loss structure Compared with investment tools such as stocks and futures, options are different in their nonlinear profit and loss structure.
For the long position of futures, the loss of the position will increase by one yuan every time the price rises by one yuan and the price falls by one yuan. For short positions in futures, the opposite is true.
2. Shortcomings and risks of option trading: In option trading, the rights and obligations of buyers and sellers are different, which makes buyers and sellers face different risk situations.
For option traders, both the buyer and the seller are faced with the risk of adverse changes in royalties. This is the same as futures, that is, within the scope of royalties, if you buy low but sell high, you can make a profit by closing your position. On the contrary, it is a loss.
