The ability of PTA derivatives service entity enterprises is increasing day by day

　In this context, the importance of rational use of futures derivatives for risk management by enterprises is highlighted
.
Ji Guangpo, chief expert of Shanghai International Cotton Trading Center, said at the meeting that after decades of development and evolution, the modern concept of hedging has gradually formed, which is different from the traditional concept of hedging that "the purpose of hedging is to protect the value".
The modern hedging concept believes that "the purpose of hedging is to minimize risks and maximize returns"
.
In addition to the different starting points, the operation ideas have also changed a lot
.
Traditional hedging believes that hedging must be at the same time, equal in quantity, and opposite in direction; modern hedging believes that after judging the trend of price movement, it is possible to open positions with mismatched time and different number of positions
.
In addition, the continuous expansion of the OTC market has also brought more trading tools for enterprises to carry out risk management
.
Traditional hedging is mainly based on the two markets of futures and spot, while modern hedging has added diversified combinations such as options and basis, which makes the trading methods more abundant and flexible
.

　"Futures and options have their own characteristics.
For PTA industry companies, futures hedging can lock in a fixed sales (or purchase) price, thereby locking in processing fees, while option hedging is to determine the minimum sales price and target The sales price is used to determine the processing fee range
.
” Guan Jiangnan, Options Manager of the Derivatives Trading Department of Ningbo Hengyi Industrial Co.
, Ltd.
, said, specifically, when the overall profit of the industry is relatively good, the choice of the execution price of PTA options can be more flexible.
Under the abundant processing fee, enterprises are less sensitive to profits, so it is not necessary to define a fixed profit point, but can choose to define a profit range.
At this time, options are a better choice; When there is a large downside risk or the company's capital flow is relatively tight, it is a better choice to directly participate in PTA futures for hedging
.

　Guan Jiangnan introduced that, in terms of the current domestic trade environment, adding PTA options to the trade between upstream and downstream enterprises or between enterprises and traders may be the best application scenario, that is, the so-called trade with rights
.
"Why do production companies and trading companies carry out such rights-based trade? In fact, for production companies, on the one hand, it is because some production companies will have some additional price demands in the process of purchasing or selling, that is, at a lower price.
Purchasing and selling at a higher price; on the other hand, it may be affected by the system of some production enterprises, and you can choose to trade with rights instead of directly entering the futures market as a means of risk management
.
"

　"The sale by the factory using the option trade is one of them
.
Simply put, the manufacturer sells the call option to the trader.
At the end of the period, if the option is exercised, the manufacturer can sell the spot at the strike price of the option.
, so that for the production enterprise, the option is not only a financial product, but a means of expanding sales, and also obtains additional income from the premium; if the option is not exercised at the end of the period, the production enterprise will continue to hold its own The spot produced, but the cost of inventory is reduced by obtaining premium income
.
" Guan Jiangnan said that whether the option is exercised or not exercised after expiration, it is attractive for a production company to sell the option.

.

　In addition, Guan Jiangnan introduced that in addition to purchasing and selling, there is another model for trade with rights - holiday insurance
.
"During the long holiday in the past two years, especially the Spring Festival holiday, commodity prices often fluctuate greatly, and there will be many defaults in the violent fluctuation.
The holiday insurance model is actually to solve such a credit risk problem
.
" Guan Jiangnan said, For example, before the Spring Festival holiday in a certain year, the supply and demand sides signed a forward contract to determine the purchase price, but considering that the supply will be made after the year, if the price drops sharply after the year, the demand side may be in breach of contract, so Out of concern about the credit of the demander, the supplier can add a put option in the contract to make the demander buy out-of-the-money put options.
If the price drops sharply after the long holiday, the option will be exercised and the supplier will supply at the exercise price of the put option.
, if the price runs smoothly after the long holiday and the option is not exercised, then the forward contract will be executed normally and there will be no default risk
.

　"In fact, the domestic trade model is developing and updating very fast, and the needs of production enterprises are also diversified
.
As enterprises become more proficient in the application of derivative instruments, the future trade with rights may become a regular trade.
Types are added to the daily production and operation of many enterprises
.
" Guan Jiangnan said
.