What does the company's option mean? What are the benefits? What are the risks?

If the stock price exceeds the subscription price at maturity, the option holder will exercise his option by paying the subscription price, and when the option is issued in the company as a new share, he will enjoy the same treatment as other ordinary shares. Company option is a way for a company to raise additional capital at a certain point in the future (validity period). But there is no guarantee that the stock price will definitely exceed the option subscription price at that time. Company options are also used as employee incentives and can be linked to performance, but these stocks cannot be listed in ASX. Exchange-traded options (ETO) are derivatives issued on existing stocks, and each option consists of 65,438+0,000 shares of the relevant company. Usually, ETO is only issued for large-cap stocks with good liquidity. Both the seller and the buyer in the option (usually called option seller) have the obligation to sell in the buyer's option or buy in the seller's option. Investors should be aware of some risks related to ETO, especially when selling options. Investors can use options in a variety of ways, including reducing the risk in the portfolio, increasing leverage to make a profit or just for trading. In any case, you should consult your agent. They should provide you with a detailed explanation of the ETO market before the transaction. Because of its low price, company options and exchange-traded options can provide investors with leverage when the company's stock price rises, while company options are more risky when the stock price falls, and they will not get dividend rights.