Weekly index options

In the past two weeks, as the Sino-US trade war has eased and the UK’s Brexit plan has become clear, the market seems to have stabilized

The pound against the Hong Kong dollar rose from 9.6 to more than 10 Hong Kong dollars. The price of gold stopped its upward trend from 1,300 US dollars in June this year, and slightly fell back to the 1500 level. The dollar strengthened against the yen and returned to the 108 side. Even the second-hand property market in Hong Kong suddenly went. With the relaxation of the mortgage insurance property price ceiling and more transactions, etc., it is also a good thermometer. When these indicators of daily life appear in the same direction, they can also be used as a reference for short-term stock investors.

This “Weekly Index Options" is just a reference for writing these short-term clients as investment vehicles

Aliens feel that things are impermanent, and that Hong Kong’s first half of the year is peaceful and peaceful, and that the country’s civil and military security has suddenly turned sharply in the second half of the year. The world’s civilized cities suddenly turned into black and white zombies to kill the battlefield! Do you want to solve the zombies? Every few days, I have to go out and destroy, and every time I am in the evening, I have to go to work tomorrow, so aliens think that using zombies is more appropriate than Xiaoqiang. Sometimes I think they are very hard, but they are all fruitful. Aliens oppose the use of violence to solve problems.

Low entrance fee, high time value loss

Ok, return to the topic. Due to the sudden surge in news and events in the Hong Kong market in recent years, the HKEx has recently launched a new product, the weekly option, which is currently only applicable to the Hang Seng Index and the HSCEI. Investors provide strategic tools that are more appropriate for their investment cycle to hedge risk and fight for returns.

To make an analogy, compare the HSI 26000 Call in October. The traditional monthly option has a 2.34% change in the HSI from 10 to 11 this month. The return of 26000 Call is 80.52%, but the weekly option is The rate of return can be increased to 132.34%. Why is there such an effect? This is entirely because the weekly option leaves the settlement date for a relatively short period of time, so the time value is relatively large, and the result is that the option money that the investor needs to pay is small.

A weekly option is the same as a monthly option with a 50-point index. If the weekly option value is 10 points, an option contract is worth 500 yuan (10 x 50 yuan).

Summary: Admission fees for weekly options are cheaper. In a vulgar way, it is relatively short-lived and monthly options are relatively long-lived. The closer the settlement date is, the lower the probability that the purchased option will exceed the OTM strikes (because there is no time to be a chip), so the value of the final date will drop rapidly. But for some very short-term investors, this is exactly an opportunity, because weekly options will make them use smaller cutters to “bigger" trees.

The unit value of the time value loss Theta value, the time value loss of the weekly option is more than twice as high as the one month option. For example, the option Theta value of only 5 days is -18, and the Theta value of the option that expires on the 30th is only -8 (Note: -8 means that the premium for each day consumes 8 points, per point 50 yuan calculation, that is, 400 yuan); more attention is that the last 5 days of Theta value will fall faster, from -18 to -39 [Figure]. For those options, because the time value of the premium is getting more and more, it is most suitable for investors who have no choice but to opt for option options in the last few days. So, whether you are an option or a buy option, the rate of return will inevitably be greater than the one-month option. Of course, the explosive power is stronger than the monthly option, and vice versa. Therefore, the volatility is large, suitable for some short-term adventurers.

Hedging short-term emergencies

Another use is to hedge very sudden events, hoping to use the cheapest options to hedge events that may affect the market in a short-term burst.

Finally, some people will use weekly options for a monthly Volboility Trade volatility strategy that has been widely used by institutional speculators. Since the time consumption value of the longer-term right is lower, some institutional speculators will buy both the current option and the next-month option at the same time, because they hope to find a good next month when they receive the monthly premium. Opportunity to close the position and charge the value of Theta. The best ending is that the moon is calm, and then the next month, like the reverse, the strategy will play its biggest role. With weekly options, investors can use the weekly option to buy a one-month option to do the same strategy.

According to exchange data from various countries around the world, the weekly weekly options contract in Taiwan is more than the trading volume of its January options. Similarly, the US Micro S&P 500 Index Options Contract also sees that there is not much difference between the weekly and one-month options trading volume.


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