Research On The Impact On The Stock Index Of The Launch Of Index Futures And Index Options

In the financial market, there are many types of financial assets.All financial assets can be represented in terms of risk and return. By making assumptions about people’s risk preference, financial analysts determine what kind of financial asset or portfolio gains maximum benefit to investors who only take minimum risk. So the research on the risks and benefits of each asset is particularly important.The stock index has played an important role in the financial market because it represents the current situation of financial market by compiling the price trend of all representative stocks in the financial market. The change of Stock index affects investors’ heart. For the stock index, the volatility of change rate of the stock index represents the market risk. A controllable risk is an important factor to keep a healthy development of the financial market and for financial market to serve the real society. So the research on stock index volatility is very meaningful.According to the theory,financial derivatives function to control the risk of the underlying asset.A single asset has different kinds of derivatives. These derivatives influence the underlying asset in the same or different way as well as the similar or different extent. So this paper takes an example of Hongkong Hang Seng Index,using empirical research methods, to analyze respectively the change of stock Index volatility and its asymmetric effect when introducing the Hang Seng Index Futures and the Hang Seng Index Options. Put it more specifically,the paper takes the time when The Hang Seng Index Futures and the Hang Seng Index Option were launched as a critical point, applies GARCH model and TARCH model which include dummy variables and then studies the similar and different effect of the two financial derivatives on the underlying asset In order to test the theoretical results by the empirical way.the empirical study shows that the introduction of the Hang Seng Index futures and Hang Seng Index options fell the volatility of the Hang Seng Index.Also the introduction of Hang Seng Index Options reduces the asymmetric volatility of the Hang Seng Index. Given the conclusion above, this paper argues that it is important to further expand the participation of financial derivatives trading in the mainland of our country and improve the structure of investors.