Options on Japanese Government Bond (JGB) Futures
About JGB Futures
The underlying of Options on JGB Futures is JGB Futures contract. Options buyers could exercise before maturity date (American type). JGB Futures transaction occurs when exercising options (or position being exercised).
Risk hedge function
Options on JGB Futures providing hedge function to JGB holders against the risk of JGB price fluctuation.Options on JGB Futures providing hedge function to JGB holders against the risk of JGB price fluctuation.
Efficiency of asset management
Options seller could earn premium. On the other hand, Options buyer could earn same level of profit by smaller money compared to invest JGB. Moreover, institutional investors could do Flexible portfolio management with low cost.
Providing new investment tool
Options buyer could limit loss to the amount of premium paid even they could get same level of profit by exercising the position or selling the position when their expectation realized.