Weekly index options contracts on Hang Seng TECH Index (“HSTECH”) provide risk management tools for investors to manage their short-term risks on the exposure of HSTECH.
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.
With a shorter maturity, weekly index options contracts would have a lower option premium and faster time decay compared to the monthly index options contracts.
USES 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.