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(Photo= Yonhap news) |
[Alpha Biz= Reporter Kim Jisun] Mirae Asset Securities has announced a restriction on individual investors' trading of index options, limiting the number of contracts they can sell to 600.
According to the financial investment industry on the 16th, Mirae Asset Securities will impose this limit on call and put options starting from the 15th of next month. This means that if the total number of contracts from executed balances (held balances), unexecuted balances (pending order details), and new orders exceeds 600 contracts, investors will not be able to execute option selling contracts through Mirae Asset Securities.
Options are one-way contracts, unlike futures, meaning that the risk of loss is unlimited for sellers. While the loss for buyers is capped at the premium paid, sellers face potentially infinite losses. For instance, selling call options requires the seller to sell the asset at a predetermined lower price even if the market price rises, and selling put options means buying the asset at a predetermined price even when its market price falls.
Particularly, the strategy of selling both call and put options (known as a strangle or straddle) can yield profits during sideways market movements by collecting premiums from both sides, but it also exposes sellers to significant losses during sharp market fluctuations. This was evident on Black Monday, August 5, when the KOSPI dropped over 8%, leading to substantial losses for customers who had subscribed to such options through Hana Securities.
AlphaBIZ Kim Jisun(stockmk2020@alphabiz.co.kr)
