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.
Investors can now target a specific time period to decay their short term trading strategies using weekly index options.
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.