Palm Olein Options Listing and Internationalization Full Moon Shows Strong Development Potential
On June 18, as China’s first option contract open to the outside world, palm olein options were officially listed on the DCE and simultaneously introduced foreign traders to participate in the transaction. So far, it has been listed for a full month. The reporter was informed that in the past month of listing, the palm olein options market has been operating rationally and steadily, with reasonable and effective pricing, active participation of domestic and foreign customers, and steady growth in open interest, showing good market liquidity and development potential. Industrial customers have begun to use its development risk management, all parties in the market are full of expectations for palm olein options to serve the development of the global industry.
Statistics show that as of July 16, palm olein options have been in operation for a total of 21 trading days, during which the cumulative trading volume was 931,400 (one side, the same below), the cumulative trading volume was 1.512 billion yuan, and the average daily open interest was 59,700 lots. Palm olein options trading volume and open interest accounted for 4.0% and 9.3% of the underlying futures respectively, and accounted for 8.9% and 4.2% of all options trading volume and daily average open interest of DCE. The average daily turnover rate was 0.9, which was at a reasonable level. Among them, investors have a slight preference for put options, with put options trading and holding positions accounting for 51.4% and 59.2%, respectively. Among the listed options series, the p2109 series contract transactions are the most active, with its trading volume accounting for 90.0% of the total trading volume of palm olein options, and its daily average holdings accounting for 78.0%.
From the perspective of price trends, palm olein options are priced reasonably and effectively. The price of all real-valued options contracts is generally higher than that of out-of-the-money contracts, and the price of far-month contracts is higher than that of near-month contracts. There is no price inversion, and there is no obvious arbitrage opportunity in the market. From the perspective of investor participation, since the listing of palm olein options, unit customers have actively participated, and the number of unit customers participating in transactions has steadily increased. Since June 18th, about one-fifth of the clients and corporate clients participating in DCE options trading have participated in palm olein options. Palm olein options unit clients accounted for 62.8% of the holdings, and overseas account holders and clients with overseas background accounted for 5% of the holdings.
The market generally believes that the better liquidity performance of palm olein options in the first month of listing is inseparable from the market accumulation of soybean meal, corn and other options in the past two years, and it is also an effective feedback for years of options market cultivation.
Related agency options analyst Feng Shidian said that palm olein options operated smoothly in the first month of listing, and the implied volatility of the main option contracts remained at about 30%, which was comparable to the historical volatility of the underlying. The implied volatility of call options and put options at the same strike price is basically the same, and the price sequence of each option series fully meets the monotonicity and other price relationships. The option contracts are reasonably priced, the market price difference is small, and the liquidity is good. The option volatility surface is smooth, and there is no obvious arbitrage opportunity. In addition, since the listing of palm olein options, the underlying futures prices have continued to rise, and the put-to-call ratio of option holdings has risen from 0.8 on the first day of listing to 1.7 at present, indicating that investors are more rational. In general, as the first option variety to introduce foreign investors, palm olein options have performed well since its listing, enriching the tools for commodity market risk management, and providing companies with more flexible and three-dimensional risk management functions, which can better daily business activities of service entities.
Xiamen Xinshengzhou Vegetable Olein Co., Ltd. is one of the industrial enterprises that have participated in palm olein options trading. Mr. Lu, the director of the procurement and trade department, told reporters that the company’s soybean olein, palm olein trading, processing and other businesses require large-scale spot purchases on the raw material side. In order to control risks and reduce costs, the company participated in the transaction on the day when palm olein options were listed. Selling put options effectively reduces the cost of raw material procurement. "In 2021, the price of bulk raw materials will rise sharply. Under the condition of stable product prices, the sharp increase in raw material prices will bring huge business risks to companies. Compared with futures, palm olein options can meet the different needs of companies at different stages of procurement. Enterprises can obtain the time benefits brought by options based on continuous and stable production and operation. The effective combination of spot, futures and options is a combination of futures and cash in the true sense, and it will also bring greater benefits to the stable production and operation of enterprises.," he said.