Plan for stock index options trade trial
Print Edition
China will try out a simulated trading of stock index options on November 8 as part of a diversification to allow more investment products in the capital market and offer investors a tool to hedge risks.
The simulated trading, to be tried out on the China Financial Futures Exchange, will start with index options based on the CSI 300 index, a gauge that tracks the performance of 300 biggest stocks traded on the Shanghai and Shenzhen stock exchanges.
“The launch of stock index options will help improve market efficiency and provide investors with a tool to manage risks,” the exchange said in an e-mailed statement yesterday.
The proposed options will have a multiplier of 100 yuan (US$16) on the option price, which means a one-point change in the value of the CSI 300 index results in a 100 yuan change in the value of an option contract.
The new derivative will be a European-style option that can only be exercised at the time of maturity, the exchange said, adding that index options will be settled in cash on expiry.
The simulated trading of stock index options is seen as a key step to introducing China’s first options as part of deeper financial reforms.
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