Core Viewpoint - Coking coal is a crucial raw material for the steel industry, supporting an annual crude steel production of approximately 1 billion tons in China. The price of coking coal is influenced by various factors, including supply-demand dynamics, policy adjustments, and international trade environments, leading to significant volatility. This volatility presents both opportunities and risks for market participants. The introduction of coking coal options on January 16 aims to provide a more flexible tool for price risk management, offering lower-cost and richer strategies for hedging and profit generation [1][2]. Coking Coal Market Characteristics and Option Application Basics - The coking coal market exhibits distinct risk characteristics influenced by upstream and downstream factors, including coal mine capacity, import policies, and seasonal patterns. For instance, in the first half of 2025, coking coal prices fell significantly due to oversupply and weak downstream demand, with prices dropping from 1174.5 yuan/ton to a low of 709.0 yuan/ton, a decline of 39.63% [2]. - The introduction of coking coal options is essential to address price volatility risks and meet the needs of spot market participants, serving as a complement to coking coal futures [2]. Complementarity of Coking Coal Options and Futures - Futures hedging relies on reverse positions for risk mitigation, but in a one-sided price trend, it may incur continuous losses and require significant capital. Options enhance risk management flexibility through the mechanism of "paying a premium for the right" [3]. - Key advantages of options include asymmetric risk and reward, higher capital efficiency, and strong strategic flexibility, allowing for various strategies to adapt to different market expectations [3]. Risk Management Strategies for Industry Chain Enterprises - Industry chain enterprises seek stable operating profits, and options can provide precise protection against risks in procurement, inventory, and sales [4]. Upstream Production and Trading Enterprises: Inventory Preservation Strategy - Coal mining companies and traders face the risk of inventory devaluation due to price declines. Options strategies can achieve "price protection without loss," allowing for potential profit retention while limiting losses [5]. Basic Strategy: Single Option Strategy - Enterprises expecting a price decline can buy put options to hedge against losses while retaining upside potential. For example, buying a put option with a strike price of 1600 yuan/ton while the market price is 1700 yuan/ton allows for partial loss compensation if prices fall [6]. Advanced Strategy: Option Combination Strategy - When expecting narrow price fluctuations, enterprises can buy put options while selling call options to generate premium income, thus lowering the cost of the put option. This strategy is suitable for trading companies with slow inventory turnover [8]. Downstream Processing Enterprises: Procurement Cost Control Strategy - Washing plants and coking plants can lock in procurement costs through options to mitigate the risk of rising prices [9]. Basic Strategy: Single Option Strategy - Enterprises anticipating price increases can buy call options to lock in maximum procurement prices, ensuring costs remain below market prices even if prices rise [9]. Advanced Strategy: Futures + Options Combination Strategy - When expecting price increases with potential short-term corrections, a combination of futures and options can retain upside potential while locking in maximum short-term losses [9]. Investor Option Application Strategies: Profit Generation and Risk Hedging - Investors can utilize options strategies to achieve investment gains and arbitrage based on market trends and volatility assessments [11]. Trend Trading Strategy: Adapting to Unilateral Trends - Investors can capture profits while controlling risks by buying call options or bull spreads when a strong upward trend is anticipated [12]. Volatility Trading Strategy: Capturing Price Fluctuation Opportunities - Investors can construct strategies to profit from changes in volatility without needing to predict price direction, such as buying straddles when expecting increased volatility [13]. Extreme Market Risk Response Strategies - In the event of sudden market changes, options can be used to hedge against extreme price fluctuations, ensuring that risks are managed effectively [15]. Key Features of Options in Extreme Market Conditions - In extreme conditions, implied volatility rises sharply, making options a dual-benefit tool for capturing both price movements and volatility increases [16]. Conclusion and Outlook - The introduction of coking coal options enhances the risk management capabilities of enterprises in the coal-steel industry, transitioning from passive hedging to active management. The ongoing development of the options market will further expand opportunities for market participants to achieve stable operations and trading profits [24].