WEEKLY INDEX OPTIONS (Commence Trading on 16 September 2019)
To supplement the existing monthly index options, introduction of the weekly index options contracts on HSI and HSCEI aims to provide risk management tools for investors to manage their short term risks on the exposure of HSI and HSCEI positions.
Weekly index options are similar to the monthly index options except that they expire on the last business day of every week instead of the second last business day of the month.
FEATURES OF WEEKLY INDEX OPTIONS
With a shorter maturity, weekly index options contracts would have a much lower option premium and faster time decay comparing to the monthly index options contracts, thus allowing short term trading and more attractive short options strategies.
USAGES OF WEEKLY INDEX OPTIONS
Weekly index options are useful for investors in the following ways:
- Cost effective: trading or hedging against short term market events with relatively low option premium.
- Yield enhancement: employing short options strategies to capture option premium by taking advantage of the rapid time decay of its premium.
- Option risk management: managing the risks of options portfolio (delta, gamma and vega, etc) more effectively.
Weekly index options can also be used for options trading strategies such as covered Calls, call/put spreads, straddles etc. at a relatively low cost.
Contract Specifications
Underlying Index |
Hang Seng Index |
|
HKATS Code |
"HSI” + Strike + Month + Year + “W” + Expiry Day e.g. HSI27000A9W25 Where: -“HSI” means underlying code; -“27000” means strike price; -“A” means Jan - contract month; -“9” means year 2019 contract; -“W25” means weekly product with 25th of the month as expiry |
|
Contract Multiplier |
HK$50 per index point |
|
Minimum Fluctuation |
One index point |
|
Contract Weeks |
Spot Week and the next week, except where the Expiry Day of the Weekly Contract is the same as the Expiry Day of the Spot Month HSI Option Contract |
|
Trading Hours |
T Session 9:15 am - 12:00 noon (morning trading session) 1:00 pm - 4:30 pm (afternoon trading session) (Expiring contract closes at 4:00 pm on the Expiry Day) T+1 Session 5:15 pm – 3:00 am (after-hours trading session) |
|
Expiry Day |
The Last Business Day of the Contract Week |
|
Final Settlement Price |
The average of quotations taken at (i) five (5) minute intervals from five (5) minutes after the start of, and up to five (5) minutes before the end of, the Continuous Trading Session of SEHK; and (ii) the close of trading on SEHK on the Expiry Day. |
|
Transaction Costs |
Exchange Fee |
HK$10.00 |
Commission Levy |
HK$0.54* |
|
Commission Rate |
Negotiable |
|
*The Commission Levy will be exempted for the first six months of trading from 16 September 2019 to 13 March 2020, both dates inclusive, excluding the T+1 Session on 13 March 2020. |
Trading Fees and Commission |
|
Exchange Fee |
HK$10.00 per contract per side |
Commission Levy |
HK$0.54 per contract per side |
Total |
HK$10.54 per contract per side |
Brokerage Commission |
Negotiable |