[단독] Mirae Asset limits the quantity of individual option sales… Preemptive action as transactions increase

Mirae Asset’s preemptive measures to rapidly increase individual option selling
As market volatility increases, losses increase.
Large losses were recorded even on Black Monday.

Mirae Asset Securities has restricted individual index option selling transactions to 600 contracts.

On the 16th, Mirae Asset Securities announced to individual customers that selling positions for call and put options will be limited to 600 contracts from the 15th of next month.

In the case of index options, if the concluded balance (holding balance), outstanding balance (outstanding order history), and new order quantity exceed 600 contracts, an option selling contract cannot be concluded through Mirae Asset Securities.

This measure can be interpreted as the fact that despite the risks of the option selling strategy, individuals have recently been increasing their selling positions in both call options and put options.

Unlike futures, options are one-way contracts, not two-way contracts.

In the case of a buy position, in the worst case, the loss is limited to only losing the option price (option premium), whereas in the case of an option sell position, the loss can increase indefinitely.

When selling a call option, the loss can increase infinitely if the price of the underlying asset rises, and when selling a put option, the loss can be equal to the strike price when the price of the underlying asset falls.

Selling a call option is a contract that requires selling an asset at a promised price even if the price rises, and selling a put option is a contract that requires buying an asset at the promised strike price even when the price falls.

Although there is a benefit of receiving a certain premium by selling options, losses are greatly increased if market volatility increases.

An official at the Korea Exchange said, “Option selling can be handled by institutions or foreigners with risk management capabilities, but it is risky for individuals to do.”

The double selling strategy of selling both call and put options at the same time can capture both premiums when the market moves at the box price, but losses are greatly increased in both cases of sudden rises and falls.

This is why customers who subscribed to the double-selling option wrap at Hana Securities suffered large losses in the down market during Black Monday, when the KOSPI fell 8% in one day in August this year.

Despite the risks of the option selling strategy, individual option purchases are increasing.

It is interpreted that they adopted a strategy to gain option premiums as KOSPI stayed near the 2600 level.

The net selling volume of call options by individuals in the most recent month after the previous option expiration is 9,600 contracts. Individuals also sold a net 15,000 put options. As individuals are selling options en masse, both institutions and individuals are taking buying positions in both calls and puts.

Currently, there are only two companies that limit the quantity of option sales: Kiwoom Securities and Mirae Asset Securities. An official from Mirae Asset Securities said, “We have set a limit on option sales for customer risk management purposes,” and added, “We cautiously anticipate that other securities companies may follow suit.”

From the 15th of next month, Mirae Asset Securities customers are limited to 600 contracts for index options, but can hold up to 3,000 contracts for mini index options, KOSDAQ 150 options, and dollar options.