compound option的意思|示意

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Compound option is a kind of option contract that is composed of two different types of options: a call and a put option. In finance, a compound option is a general term for a derivative instrument that involves options that are based on two or more underlying assets or securities.

A call option gives the investor the right, but not the obligation, to purchase an asset at a predetermined price at or before a predetermined date. The put option, on the other hand, gives the investor the power to sell an asset at a predetermined price at or before a predetermined date. With a compound option, the investor has the benefit of the two options: the right to purchase or the right to sell.

Compound options provide investors with more flexibility and can be used in various strategies. They can be used to hedge against different market scenarios, to manage risk, and to speculate. Compound options can be used to establish a long or short position in the underlying asset. Investors can purchase a compound option that gives them the right to buy the underlying asset at a certain price, and then sell the same asset at a higher price. This is a bullish strategy. Conversely, investors can purchase a compound option that gives them the right to sell the underlying asset at a certain price, and then buy the same asset at a lower price. This is a bearish strategy.

Compound options can also be used in more complex strategies such as straddles, butterflies, and spreads. Straddles involve purchasing both a call and a put option at the same strike price and same expiration date. Butterflies involve purchasing three call or put options with the same expiration date but different strike prices. Spreads can be constructed with two or more options of the same type (calls or puts) with different strike prices but the same expiration date.

Compound options can be quite complex and are best suited to experienced and knowledgeable investors. Investors should also be aware of the risks associated with these products. For instance, if the underlying asset does not reach the predetermined price by the expiration date, then the investor will lose all of the premium paid for the option.