This booklet aims to provide a general understanding of how exchange traded stock options can be used as an investment tool. It describes the most important characteristics of options and some of the more common trading strategies.
It also explains the risks. Without a proper understanding of the risks, it is inadvisable to engage in any option trading.Finally, it describes the way in which stock options are traded in Hong Kong and explains the characteristics of the stock options market operated by Hong Kong Exchanges and Clearing Limited (generally referred to here as HKEx).
It is hoped that, through this booklet, investors will gain an understanding of how options may be applicable to their investment requirements and an understanding of the care that should be taken when using them.
A stock option has very similar characteristics to an option on any other type of underlying asset. Nevertheless, people who are familiar with options on other products should note that there are a number of areas in which stock options are very different from options on other instruments and should be careful to note those differences.