10/09/2010 06:46 HKT     Hong Kong   Quick Link What's New? HK Shares Trading Stock Options Trading HK Futures Trading US Shares Trading My Portfolio Account Maintenance Contact Us Site Map Online Demo         Financial Futures           Hang Seng Index (HSI) Options           HSI Option is an option contract based on the Hang Seng Index which gives the holder the right, but not the obligation, to buy or sell an underlying instrument at a stipulated price on a given date. Option buyer pays a premium for that right. Option seller receives the premium but have an obligation to buy or sell the underlying instrument on assignment if the buyer exercises his right. Therefore, the buyer of an option has the right to buy (Call Option) or the right to sell (Put Option) the Hang Seng Index at the strike price on a given date (the Expiry Day). All contracts are guaranteed by HKFECC once they have been registered at the Exchange.           Commodity Name Hang Seng Index Options Location Hong Kong Exchange Hong Kong Futures Exchange Limited Contract Multiplier HK$50 per index point* Contract Months (short-dated options) Spot month, the next two calendar months, the next three calendar quarter months (i.e. quarter months are March, June, September and December) and (long-dated option) the next two months of June and December(see Note 1) Trading Hours Hong Kong Time 09:45am - 12:30pm   02:30pm - 04:15pm Trading Hours on Expiry Day Hong Kong Time 09:45am - 12:30pm   02:30pm - 04:00pm # # The closing time shall be adjusted automatically to correspond with the closing time of the underlying cash market, as it may be set from time to time. Trading Method The Exchange's Automated Trading System (HKATS). Expiry Day The Business Day immediately preceding the last Business Day of the Contract Month. Option Premium Option premium is quoted in whole index points Contracted Value Option premium multiplied by the Contract Multiplier Cabinet Trade HK$1.50 per Contract to include all applicable levies Strike Prices Strike Prices shall be set as follows:         HSI (index points)   Intervals       Short-dated Options     Below 2,000   50 At or above 2,000 but below 8,000   100 At or above 8,000   200       Long-dated Options     Below 4,000   100 At or above 4,000 but below 8,000   200 At or above 8,000 but below 12,000   400 At or above 12,000 but below 15,000   600 At or above 15,000 but below 19,000   800 At or above 19,000   1,000       On any business day, new consecutive Strike Prices may be set for, or added to, each Short-dated Option Contract (other than the Spot Month Option Contract on or after the 5th business day preceding the Expiry Day) such that at all times there will be Strike Prices representing not less than 10% above, at, and not less than 10% below the at-the-money Strike Price of the Option Contract. On any business day in a given month, the at-the-money Strike Price of each Short-dated Option Contract shall be the previous business day's Closing Quotation (as defined in the HKCC Rules) of (i) the Spot Month HSI Futures Contract for any day prior to the Expiry Day; and (ii) the next month HSI Futures Contract for any day on or after the Expiry Day, rounded off to the nearest Strike Price, unless the Closing Quotation is precisely midway between two Strike Prices in which case it shall be rounded off to the lower Strike Price. For Long-dated Options, Strike Prices shall be set or added in the same manner as for Short-dated Options except that there shall at all times be Strike Prices representing 5% above, at and 5% below the at-the-money Strike Price, rounded off to the nearest Strike Price, unless the 5% is precisely midway between two Strike Prices in which case it shall be rounded off to the lower Strike Price. For both Short- and Long-dated Options, Strike Prices shall be set on a temporary basis at other intervals as may from time to time be determined by the Chief Executive in consultation with the Commission or at other intervals as may from time to time be determined by the Board in consultation with the Commission. The Exchange reserves the right to introduce new or delete existing Strike Prices at any time. Exercise Style European Style options which may only be exercised on Expiry Day. Settlement on Exercise Cash settlement of the Final Settlement Value. Final Settlement Day Business day immediately following expiry day Official Settlement Price The Official Settlement Price for Hang Seng Index Options shall be a number, rounded down to the nearest whole number, determined by the Clearing House and shall be the average of the quotations of the Hang Seng Index taken at five (5) minute intervals during the Expiry Day and compiled, computed and disseminated by HSI Services Ltd.* The Chief Executive of the Exchange has the power under the Regulations for trading Stock Index Options to determine the Official Settlement Price under certain circumstances. Position Limits Position delta for Hang Seng Index Futures, Hang Seng Index Options, Mini-Hang Seng Index Futures and Mini-Hang Seng Index Options combined of 10,000 long or short in all Contract Months combined provided the position delta for Mini-Hang Seng Index Futures or Mini-Hang Seng Index Options shall not at any time exceed 2,000 long or short in all Contract Months combined. For this purpose, the position delta of one Mini-Hang Seng Index Futures Contract will have a value of 0.2 and the position delta of one Mini-Hang Seng Index Option Contract will be one-fifth of the position delta of the corresponding series in the Hang Seng Index Option Contract. Large Open Positions 500 net long or net short contracts, in any one series, per Exchange Participant for the Exchange Participant's own behalf; and 500 net long or net short contracts, in any one series, per each Client. Minimum Fluctuation One index point Trading Fees & Levies (Per Contract Per Side) Exchange Fee HK$10.00 SFC Levy HK$0.80 Total HK$10.80 Exercise Fees Options that are exercised on Expiry Day shall attract an Exercise Fee of HK$10.00 per contract. Contracts that are not exercised by the Clearing House will be deemed to have expired worthless and will not attract an Exercise Fee. * Same as the Hang Seng Index Futures Contract Note 1 After the Expiry Day in June and December respectively, a new Long-dated Option with a 24 month term will be introduced and new Strike Prices will be set in the manner set forth under "Strike Prices" above. Note 2 The Hang Seng Index Option Contract and the Mini-Hang Seng Index Option Contract are fungible. Positions in these two Exchange Contracts will be netted automatically (in the case of House and Registered Trader accounts) or may be closed out (in the case of Client account) in accordance with the Clearing House Rules. The above information is subject to change upon market condition     Back     About Sun Hung Kai Financial  |  Help  |  Contact Us  |  Financial Glossary  |  Disclaimer  |  Subscription Agreement  |  Important Anti-Fraud Information  |  My PC Settings Copyright © 2010 Sun Hung Kai & Co. Limited. All rights reserved.