This article comes from the public account: Option Knowledge Planet 50etf options are different from stocks in that they can be traded in both directions, while stocks can only be traded in one direction. So 50ETF options can be used to hedge the risks caused by stock declines. S

This article comes from the public account: Option Knowledge Planet

50etf Options are different from stocks in that they can be traded in both directions of and , while stocks can only be traded in one direction. Therefore, 50ETF options can be used to hedge the risks caused by the decline of stocks in . So what are the ways to use 50ETF options to hedge risks?

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1. Selection of expiration date

When investors perform actual operation of options, there is a method that everyone will do: first buy put options in the recent month, and wait until the contract period When it expires, determine again whether to buy the put option for the next month. The advantage of this operation is to reduce the cost of insurance and make decisions flexibly based on the price trend of the underlying stock.

2. Selection of exercise price

In fact, many investors like to buy deeply out-of-the-money put options. You must understand that although its price is very low, the range of downside protection it provides is small.

Although deep in-the-money put options can protect a larger range, their premium is too high, which seriously limits investors' potential profits. This is an overly conservative strategy.

recommends that investors buy the following three options, such as put options that are slightly out-of-the-money, at-the-money or slightly in-the-money. In this way, investors can achieve a balance between protecting the stock's downside risk and retaining the stock's rising profits.

3. Shanghai Stock Exchange 50ETF Advantages of options for hedging risks

1. Low capital occupation

Options themselves are an investment tool with a small investment, and only a small amount of funds can be used to hedge risks.

2. High capital utilization efficiency.

options implement the T+0 system and have high capital utilization efficiency. This advantage is more obvious than margin financing and securities lending. Since the A-share market implements the T+1 system, T+1 is also used for margin financing and securities lending. At the same time, there is still a situation where there is no securities available for securities lending. After years of cultivation, the options market's liquidity has gradually improved, and futures and spot linkages are good. Under the T+0 system, funds can be quickly withdrawn and withdrawn, improving usage efficiency.