Stock Index Options Theory And Its Potential Applications In China

Stock index option is an option form based on stock index. In the past 20 to 30 years, derivative instruments with stock index as their underlying objects made an amazing development both at financial markets of developed countries and some new markets around the world. To develop our own stock index derivatives market is of very importance to averting market system risks, protecting investors' interest, enriching investing instruments, developing institution investor. It is also of much significance to increasing the market liquidity and boosting a more animate market.Targeted at one of the stock index derivative instruments-stock index option, this paper does some research work to elaborate the significance of developing it in China. There are altogether 5 chapters in this paper. The first chapter gives a short introduction to the modern option theories, including the intrinsic values of options, the risk-averting theory of options, and the option pricing theories; The second chapter shows how the stock index options were born and developed, and their main function. The emphasize is to discuss the interact merchandize of the derivatives and the basis markets, and the influence of deferent speculation patterns to the stability of the market. The third part deals with the design of stock index option contracts; The fourth part discuss the application of stock index option in funds management in China, deliberating deferent insuring ways considering varies securities portfolio. Also in this part a risk-averting simulation based on Chinese stock market using index option is presented. Finally, the risk control of trade in stock index option is discussed.