What is ETF option?

ETF option is an option with ETF as the target.

ETF (Exchange-traded Fund) is a transactional open index fund, which can be bought and sold in the secondary market like stocks, and can also directly purchase and redeem ETF shares from fund managers through ETF constituent stocks. ETF is an indexed investment, and investing in ETF can avoid the situation that "the index goes up and the stock goes down" that often occurs in single stock trading.

Investors buying ETFs are equivalent to buying an index. In the process of actually buying and selling ETFs, there are often all kinds of "helpless regrets", such as not buying when you are bullish, buying and worrying about falling.

There are two situations that often happen:

In the first case, I am optimistic about the rise of the SSE 50 index, but the index point is at a high level (for example, 2.600 yuan/share). At this time, I was faced with the dilemma of buying or not buying (SSE 50ETF).

If I buy it and the ETF price falls below 2.600 yuan afterwards, I will regret it; If I hadn't bought it, the price would have soared to 2.700 yuan afterwards, and I would have regretted it.

If there is such a contract in the market now, it says: I have the right to buy 10000 SSE 50ETF at a price of 2.600 yuan/share after one month.

If the ETF price is higher than 2.600 yuan after one month, then I will exercise my rights in the contract and still buy the ETF at the price of 2.600 yuan/share; If the ETF price is less than 2.600 yuan after one month, then I give up my rights in the contract.

Such a contract actually gave me the right to buy 10000 ETF at 2.600 yuan/share after one month. This is a call option of ETF, which gives investors the right to buy ETF.

In the second case, I bought 10000 SSE 50ETF at a price of 2.500 yuan/share last month. After a while, the market price of the fund has risen to 2.600 yuan/share. At this time, am I facing the dilemma of throwing or not throwing? If I throw it away, then the ETF price will rise to 2.700 yuan afterwards, and I will regret it; If I didn't throw it out, I would regret it if the ETF price fell to 2.500 yuan afterwards.

If there is such a contract in the market now, it says: I have the right to sell 10000 SSE 50ETF at a price of 2.600 yuan/share after one month.

If the ETF is higher than 2.600 yuan after one month, then I just give up my rights in the contract. If the ETF is less than 2.600 yuan after one month, then I will exercise my rights in the contract and still sell 10000 ETF at the price of 2.600 yuan/share.

Such a contract actually gives me another right: I can sell 10000 ETF at a price of 2.600 yuan/share after one month. This is ETF put option (put), which gives investors the right to sell ETFs.