Meanings of purchase and sale certificates

Investors: What are the meanings of the Purchase and Sale certificates?

Li Jin: WAF is the right to buy or sell related assets. The right to buy is called a "call" and the right to sell is called a "put ).

If investors are optimistic about the performance of the relevant assets in the market, they should buy a purchase certificate. When the market price of the assets is higher than the exercise price, in theory, investors can use the exercise price to buy the relevant assets, and then sell them at the market price to earn the price difference. Since the current dens are all settled in cash, investors will be charged for the cash difference between the settlement price and the exercise price. On the contrary, if the market price of the relevant assets is lower than the exercise price, the loose has no value, and investors will lose the cost of purchasing the loose.

If investors look down on the performance of related assets in the market, they should buy a stock identification card. When the market price of the relevant assets is lower than the exercise price, theoretically, investors can buy the relevant assets from the market and sell them to the issuer at the exercise price to earn the price difference. In actual transactions, investors will be charged for the cash difference between the exercise price and the settlement price. However, if the price of the relevant assets is higher than the exercise price, investors will lose the cost of purchasing the dens.

The above profit model assumes that the investor holds the nest wheel to the expiration date. In addition, investors can also make profits by buying low, selling high, which is not much different from buying and selling stocks.