Option Features

There are 5 main components of every option contract. They are
1. Underlying security
2. Contract Size
3. Expiry Date
4. Exercise (Strike) price
5. Premium

The underlying security in our trading is mainly shares. There is a list of optionable stocks on the HKEX website. The contract size for stock option depends on the underlying stock. So for example 1 lot of HSBC share equal to 400 shares, so the contract size for HSBC option will cover 400 shares. The expiry date is the date which all unexercised contract will expire worthless, because all options has a limited life span. The exercise price is the predetermined buying or selling price for the underlying share if the option is exercised. The premium is the price of the option that is trade. For example if the HSBC option premium is $1.00, then the price for buying one contract will be $400.

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Trading Room
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