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Styrene, ethylene glycol options steadily expand in first month of trading
2023/7/3
On June 15, styrene and ethylene glycol options were listed for a full month, with active trading of options contracts and steady expansion of the market size during the month.
From the first month of trading data, styrene and ethylene glycol options listed in the first month of average daily turnover of 117,100 lots and 57,400 lots, respectively, and average daily position of 48,900 lots and 38,800 lots, respectively. The options turnover accounted for 21.97% and 14.36% of the underlying futures, and the options position accounted for 10.46% and 5.46% of the underlying futures, respectively. The number of customers involved in the trading of the two options varieties reached 5,574 and 3,820 respectively, of which the turnover of general corporate customers accounted for 29.24% and 17.81% respectively, and the position accounted for 14.77% and 21.18% respectively, industry and institutional participation are in the forefront of the six energy and chemical options varieties of the DMS.
It is understood that due to the styrene futures near-month active contract continuity, options design close to the spot demand, industrial enterprises near-month options hedging needs to be effectively met, just one month styrene options has become the largest daily turnover of the six energy options in the Institute.
Yuan Ye, the head of the China-based petrochemical options, said that after the listing of the two options, the company tried the styrene option buy put + sell call collar option combination on the floor, the bid-ask spread is small, the transaction speed is faster, the overall performance is satisfactory.
"In the first month, the two varieties of options turnover and positions showed sufficient liquidity, most of the options contract turnover is concentrated in the futures main contract corresponding to the options series contracts, the market operation as a whole is at a better level, effectively playing the function of price insurance." Zhou Jun, deputy general manager of Nantong Chemical Light Industry Co. said.
"In the first month of listing, a number of related enterprises actively participated in the hedging use of options, and the turnover gradually climbed." Xie Yilun, an options researcher at the Dongzhi Futures Derivatives Research Institute, said.
It is reported that many industrial customers have constructed "option collar strategy" (i.e. buy puts + sell calls) to hedge spot positions, which not only can play a hedging effect, but also can reduce the overall hedging cost of the strategy.
In Zhou Jun's view, the first month of listing two options varieties show a relatively obvious shock downtrend, selling calls is a better hedging strategy. At the same time, combined with the implied volatility of styrene options show an upward trend, selling volatility and price of the "double short" strategy will be able to better protect earnings.
"When the market is slow to pure benzene inventory, downstream in the seasonal off-season, you can choose to sell styrene call options to build a covered strategy to enhance the return on the spot position; similarly, due to the slowdown in ethylene glycol inventory, and the end of June to early July device is expected to restart the device, the overall market inventory pressure, you can also build a covered strategy. " Xie Yilun said.
In Yuan Ye's view, the first month of styrene options volume and position growth rapidly, the current intra-day liquidity has been better than polyethylene, polypropylene and other old options varieties. "Based on the first month, we are optimistic about the future liquidity and market participation of styrene options. As companies' awareness of options products gradually deepens, market participation will also further increase."
From the first month of trading data, styrene and ethylene glycol options listed in the first month of average daily turnover of 117,100 lots and 57,400 lots, respectively, and average daily position of 48,900 lots and 38,800 lots, respectively. The options turnover accounted for 21.97% and 14.36% of the underlying futures, and the options position accounted for 10.46% and 5.46% of the underlying futures, respectively. The number of customers involved in the trading of the two options varieties reached 5,574 and 3,820 respectively, of which the turnover of general corporate customers accounted for 29.24% and 17.81% respectively, and the position accounted for 14.77% and 21.18% respectively, industry and institutional participation are in the forefront of the six energy and chemical options varieties of the DMS.
It is understood that due to the styrene futures near-month active contract continuity, options design close to the spot demand, industrial enterprises near-month options hedging needs to be effectively met, just one month styrene options has become the largest daily turnover of the six energy options in the Institute.
Yuan Ye, the head of the China-based petrochemical options, said that after the listing of the two options, the company tried the styrene option buy put + sell call collar option combination on the floor, the bid-ask spread is small, the transaction speed is faster, the overall performance is satisfactory.
"In the first month, the two varieties of options turnover and positions showed sufficient liquidity, most of the options contract turnover is concentrated in the futures main contract corresponding to the options series contracts, the market operation as a whole is at a better level, effectively playing the function of price insurance." Zhou Jun, deputy general manager of Nantong Chemical Light Industry Co. said.
"In the first month of listing, a number of related enterprises actively participated in the hedging use of options, and the turnover gradually climbed." Xie Yilun, an options researcher at the Dongzhi Futures Derivatives Research Institute, said.
It is reported that many industrial customers have constructed "option collar strategy" (i.e. buy puts + sell calls) to hedge spot positions, which not only can play a hedging effect, but also can reduce the overall hedging cost of the strategy.
In Zhou Jun's view, the first month of listing two options varieties show a relatively obvious shock downtrend, selling calls is a better hedging strategy. At the same time, combined with the implied volatility of styrene options show an upward trend, selling volatility and price of the "double short" strategy will be able to better protect earnings.
"When the market is slow to pure benzene inventory, downstream in the seasonal off-season, you can choose to sell styrene call options to build a covered strategy to enhance the return on the spot position; similarly, due to the slowdown in ethylene glycol inventory, and the end of June to early July device is expected to restart the device, the overall market inventory pressure, you can also build a covered strategy. " Xie Yilun said.
In Yuan Ye's view, the first month of styrene options volume and position growth rapidly, the current intra-day liquidity has been better than polyethylene, polypropylene and other old options varieties. "Based on the first month, we are optimistic about the future liquidity and market participation of styrene options. As companies' awareness of options products gradually deepens, market participation will also further increase."
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