Risk of stock option trading: In option trading, the rights and obligations of buyers and sellers are different, which makes buyers and sellers face different risk situations. For option traders, both buyers and sellers face the risk of adverse changes in rights. This is the same as futures, that is, within the scope of rights, buy low and sell high, and you can make a profit by closing your position. On the contrary, it is a loss. Unlike futures, risks are controlled within the scope of rights. The short position risk of options is the same as that of futures. Because the premium obtained by the option seller can provide corresponding protection, it can make up for some losses of the option seller when the price changes adversely.
Although the risk of option buyers is limited, their loss ratio may be 100%, and the limited losses add up to greater losses. Option sellers can get a premium. Once the price changes adversely or the volatility rises sharply, although the futures price cannot fall to zero or rise indefinitely, from the perspective of fund management, for many traders, the loss at this time is equivalent to? Indefinite? . Therefore, investors must have a comprehensive and objective understanding of the risks of option trading before investing in options. Stock option practice: set up salary management committee or stock option management committee. Under the direct management of the board of directors, the Committee has the right to decide the issuer, grant amount, grant time, emergency treatment, stock option scheme description and other matters of the company. According to the company's share expansion plan, when the company increases capital and shares, a part of common stock is reserved as stock options.
Determine the price, execution and validity of stock options. The subscription price of stock options can be based on the average market price of stocks for a period of time before the signing date of option contracts. There are two ways to implement stock options: unified method and accelerated method; Acceleration method refers to the method that the proportion of exercisable options increases year by year with the increase of years. Compared with the uniform speed method, the acceleration method can better protect the long-term interests of enterprises. The stock option is valid for 5- 10 years after the contract is signed or before the manager leaves the company. Because of the information asymmetry between managers and minority shareholders, managers should exercise stock options within a certain period of time, and companies should disclose such transactions. It should be noted that when a company issues, issues shares or share split, it shall increase stock options in the same proportion. If the manager violates the law, the company has the right to withdraw the stock options that have not been exercised. When the stock price is lower than the exercise price, it is generally not allowed to re-price stock options.