Members at the training session on options trading at MXV's office. VNA/VNS Photo

HÀ NỘI — The Mercantile Exchange of Vietnam (MXV) will begin the trading of options contracts for businesses and investors on June 26.

Options can be used as hedging instruments in the commodities market.

Option contracts help buyers mitigate risk, employ more intricate trading strategies, and combine transactions to limit both risk and profit within a certain range.

"In the international market, large enterprises in the fields of production and trade use price hedging tools. Options contracts are more commonly used than other types of contracts", said Dương Đức Quang, Deputy General Director of MXV.

MXV held a training session for all 33 members on June 19.

The exchange has conducted research and added new features to the M-System dedicated to options trading, helping members, businesses, and investors easily manage their portfolios.

Quang said all members have learned about the new updates on the system. The exchange will continue to update the system in the future to support options trading, as well as commodity trading, making it more and more stable and efficient. 

Clause 3, Article 64 of the Commercial Law 2005 stipulates: A call or put option contract is an agreement whereby the purchaser has the right, but not the obligation, to buy or sell a specified commodity at a pre-fixed price and must pay a certain amount to buy this right (referred to as option money). The option purchaser may opt to effect or not to effect such purchase or sale of goods.

The Commercial Law 2005 and other guiding decrees stipulate that the entities involved in the conclusion and exercise of option contracts as well as futures contracts are defined as customers, trading members, brokerage members, payment centers and forwarding centres of the Commodity Exchange.

In the market, there are two common types of options: American options and European options. An American option is an option contract that allows the holder to exercise the option at any time prior or on the expiration date. Meanwhile, a European option is an option contract in which the holder can exercise the option only on the expiration date. — VNS