Frequently Asked Questions about US Stock Options
How to Trade US Stock Options?
Trading options is similar to trading stocks, an order can be placed after entering price and quantity.
Selecting “Buy” means buying call, selecting “Sell” means selling put. If you have already owned long or short positions, you can also close position by Buy and Sell.
Types of Orders Supported
Only Limited Order is supported currently, more types of order will be supported in a later stage.
What is the minimum trading?
Options is a kind of contract, and its trading unit is 1 contract.
Generally, the size of 1 contract is equivalent to 100 shares (Corporate Actions may affect the size of 1 contract, and may not be equivalent to 100 shares).
What is the Trading Time of US Stock Options?
The trading time of US Stock Options is the same as US Stock, the actual time (Beijing Time) is:
Daylight Time: 21:30-04:00
Standard Time (Winter Time): 22:30-05:00
*Warm Reminder: US Stock Options do not support Premarket and After-Hours Trading.
Why is the option sold below the bid price but not filled?
When trading U.S. stock options, you may sometimes observe that some orders are filled at worse prices but your own order placed at a better price is not filled. This may be caused by the following reasons.
1. The liquidity of the options market is normal. However, due to the special quotation rules of the U.S. market (BBO / NBBO), the bid and ask you see are the highest bid and lowest offer price of a particular exchange. Some orders may be routed to other exchanges for transactions.
In addition, when the market is inactive, it is possible for quotes from different exchanges to vary widely but not be updated timely, which may result in orders not being filled.
2. Since there are Spread Orders in the market, an individual buy/sell order may not be filled.
For example, some brokerage firms allow customers to make a spread order by placing a long call order and a short call order. Both orders will be filled at the same time only if the prices of both orders match the ask and bid.
To take a specific example, an option on BABA has a bid price of $3.00 and the order is part of a spread order matched on the exchange. Submitting a $2.80 sell order at this time will fail to fill.
All of the above descriptions are normal for the U.S. market. The options orders have been submitted and the outcome depends on the exchange.
After enabling short-selling permissions for US stock options, the risk control status change？
The risk control status is determined based on whether the options account has been granted short-selling permissions (new users opening options accounts typically get both long and short permissions, while existing users need to separately apply for short permissions) and whether purchasing power across various markets (such as US stocks) has been linked. If short-selling permissions for US stock options are not enabled, the Margin Value (MV) ratio is uniformly used as the risk control indicator.
If short-selling permissions for US stock options are enabled and purchasing power across all markets is linked, the account's risk control status is determined using the Purchasing Value Holding Capacity (PVHC) ratio. However, if short-selling permissions are enabled for US options but purchasing power is not linked for markets like Hong Kong or China A-shares, then the risk control status for the US stock account is assessed using the PVHC ratio, while the risk control for Hong Kong and China A-share markets continues to be based on the MV ratio.
There are differences in risk control calculation standards compared to before the permissions were granted. Post-enablement, there may be an increased risk control level for customer accounts, potentially leading to margin calls or liquidation risks. Please be aware of these implications.
