Hang Seng Index (HSI) Options
 
An HSI Option is an option contract based on the Hang Seng Index which gives the holder the right, but not the obligation, to buy or sell an underlying instrument at a stipulated price on a given date. The option buyer pays a premium for that right. The option seller receives the premium and has an obligation to buy or sell the underlying instrument on assignment if the buyer exercises their right. Therefore, the buyer of an option has the right to buy (Call Option) or the right to sell (Put Option) the Hang Seng Index at the strike price on a given date (the Expiry Day). All contracts are guaranteed by the HKFECC once they have been registered with the Exchange.
Commodity Name Hang Seng Index Options
Location Hong Kong
Exchange Hong Kong Futures Exchange Limited
Contract Multiplier HK$50 per index point*
Contract Months
(short-dated options)   Spot month, the next two calendar months, the next three calendar quarter months (i.e. quarter months are March, June, September and December) and
(long-dated option)   the next two months of June and December(see Note 1)
Trading Hours
Hong Kong Time   9:15am - 12:00 noon
    1:30pm - 4:15pm
Trading Hours on Expiry Day
Hong Kong Time   9:15am - 12:00 noon
    1:30pm - 4:00pm#
# The closing time shall be adjusted automatically to correspond with the closing time of the underlying cash market, as it may be set from time to time.
Trading Method The Exchange's Automated Trading System (HKATS).
Expiry Day The Business Day immediately preceding the last Business Day of the Contract Month.
Option Premium Option premium is quoted in whole index points
Contracted Value Option premium multiplied by the Contract Multiplier
Cabinet Trade HK$1.50 per Contract to include all applicable levies
Strike Prices
Strike Prices shall be set as follows:
 HSI (index points)   Intervals
Short-dated Options    
Below 2,000   50
At or above 2,000 but below 8,000   100
At or above 8,000   200
     
Long-dated Options    
Below 4,000   100
At or above 4,000 but below 8,000   200
At or above 8,000 but below 12,000   560
At or above 12,000 but below 15,000   600
At or above 15,000 but below 19,000   800
At or above 19,000   1,000
     

On any business day, new consecutive Strike Prices may be set for, or added to, each Short-dated Option Contract (other than the Spot Month Option Contract on or after the 5th business day preceding the Expiry Day) such that at all times there will be Strike Prices representing not less than 10% above, at, and not less than 10% below the at-the-money Strike Price of the Option Contract. On any business day in a given month, the at-the-money Strike Price of each Short-dated Option Contract shall be the previous business day's Closing Quotation (as defined in the HKCC Rules) of (i) the Spot Month HSI Futures Contract for any day prior to the Expiry Day; and (ii) the next month HSI Futures Contract for any day on or after the Expiry Day, rounded off to the nearest Strike Price, unless the Closing Quotation is precisely midway between two Strike Prices in which case it shall be rounded off to the lower Strike Price.

For Long-dated Options, Strike Prices shall be set or added in the same manner as for Short-dated Options except that there shall at all times be Strike Prices representing 5% above, at and 5% below the at-the-money Strike Price, rounded off to the nearest Strike Price, unless the 5% is precisely midway between two Strike Prices in which case it shall be rounded off to the lower Strike Price.

For both Short- and Long-dated Options, Strike Prices shall be set on a temporary basis at other intervals as may from time to time be determined by the Chief Executive in consultation with the Commission or at other intervals as may from time to time be determined by the Board in consultation with the Commission. The Exchange reserves the right to introduce new or delete existing Strike Prices at any time.
Exercise Style European Style options which may only be exercised on Expiry Day.
Settlement on Exercise Cash settlement of the Final Settlement Value.
Final Settlement Day Business day immediately following expiry day
Official Settlement Price The Official Settlement Price for Hang Seng Index Options shall be a number, rounded down to the nearest whole number, determined by the Clearing House and shall be the average of the quotations of the Hang Seng Index taken at five (5) minute intervals during the Expiry Day and compiled, computed and disseminated by HSI Services Ltd.* The Chief Executive of the Exchange has the power under the Regulations for trading Stock Index Options to determine the Official Settlement Price under certain circumstances.
Position Limits Position delta for Hang Seng Index Futures, Hang Seng Index Options, Mini-Hang Seng Index Futures and Mini-Hang Seng Index Options combined of 10,000 long or short in all Contract Months combined provided the position delta for Mini-Hang Seng Index Futures or Mini-Hang Seng Index Options shall not at any time exceed 2,000 long or short in all Contract Months combined. For this purpose, the position delta of one Mini-Hang Seng Index Futures Contract will have a value of 0.2 and the position delta of one Mini-Hang Seng Index Option Contract will be one-fifth of the position delta of the corresponding series in the Hang Seng Index Option Contract.
Large Open Positions 500 net long or net short contracts, in any one series, per Exchange Participant for the Exchange Participant's own behalf; and 500 net long or net short contracts, in any one series, per each Client.
Minimum Fluctuation One index point
Trading Fees & Levies
(Per Contract Per Side)
Exchange Fee   HK$10.00
SFC Levy   HK$0.80
Total   HK$10.80
Exercise Fees Options that are exercised on Expiry Day shall attract an Exercise Fee of HK$10.00 per contract.
Contracts that are not exercised by the Clearing House will be deemed to have expired worthless and will not attract an Exercise Fee.
* Same as the Hang Seng Index Futures Contract

Note 1
After the Expiry Day in June and December respectively, a new Long-dated Option with a 24 month term will be introduced and new Strike Prices will be set in the manner set forth under "Strike Prices" above.

Note 2
The Hang Seng Index Option Contract and the Mini-Hang Seng Index Option Contract are fungible. Positions in these two Exchange Contracts will be netted automatically (in the case of House and Registered Trader accounts) or may be closed out (in the case of Client account) in accordance with the Clearing House Rules.
The above information is subject to change based on market conditions.