The inability of some investors to pay for OTC options purchased through Hong Kong brokerage firms has recently become an important concern for investors. Are there any such risks for mainland brokerage firms? Huachuang Finance's Xu Kang team said that due to their small size, the Hong Kong brokerage firms involved are prone to imbalances, and in the context of a sharp rise in the market, huge losses will occur. As far as mainland brokerage firms are concerned, the possibility of large losses is low. Mainland brokerage firms are less likely to experience these losses due to their steady exhibition business, relatively rich hedging experience, and large-scale revenue swaps. “There are thousands of stocks rising and falling in the market. The brokers' delta hedging of individual stock options will have the problem of not being able to buy. Theoretically, there is a possibility of loss. However, since mainland brokerage firms sell many types of individual stock options at the same time, they can use ETF, ETF redemption, or stock index futures models for hedging.” Huachuang Finance's Xu Kang team believes that although brokerage firms that hedge individual stock options may not be fully hedged due to premiums/increases, etc., the overall loss may be quite manageable.

The inability of some investors to pay for OTC options purchased through Hong Kong brokerage firms has recently become an important concern for investors. Are there any such risks for mainland brokerage firms? Huachuang Finance's Xu Kang team said that due to their small size, the Hong Kong brokerage firms involved are prone to imbalances, and in the context of a sharp rise in the market, huge losses will occur. As far as mainland brokerage firms are concerned, the possibility of large losses is low. Mainland brokerage firms are less likely to experience these losses due to their steady exhibition business, relatively rich hedging experience, and large-scale revenue swaps. “There are thousands of stocks rising and falling in the market. The brokers' delta hedging of individual stock options will have the problem of not being able to buy. Theoretically, there is a possibility of loss. However, since mainland brokerage firms sell many types of individual stock options at the same time, they can use ETF, ETF redemption, or stock index futures models for hedging.” Huachuang Finance's Xu Kang team believes that although brokerage firms that hedge individual stock options may not be fully hedged due to premiums/increases, etc., the overall loss may be quite manageable.