(Adopted at the 28th meeting of the 7th Board of Governors on December 22, 2022; issued by Announcement [2023] No. 6 on January 9, 2023;  effective as of January 12, 2023; Adopted at the 20th meeting of the 8th Board of Governors on October 30, 2024; issued by Zhengshangfa [2024] No. 246 on Nov 26, 2024; effective as of March 3, 2025)

Chapter 1 General Provisions

Article 1 These Rules are made in accordance with the Regulation on the Administration of Futures Trading, the Trading Rules of Zhengzhou Commodity Exchange, and the market realities for the purposes of regulating options trading activities, protecting the lawful rights and interests of the parties in options trading, safeguarding the public interest, and promoting the functions of the market.

Article 2 “Options trading” refers to the buying and selling of option contracts through open, centralized trading or by such other means as approved by the China Securities Regulatory Commission (“CSRC”).

Article 3 The Zhengzhou Commodity Exchange (the “Exchange”) organizes options trading in an open, fair, and impartial manner and in good faith.

Article 4 These Rules apply to the options trading activities at the Exchange. The Exchange, Members, market makers, overseas brokers, clients, Futures Margin Depository Banks, and other market participants shall comply with these Rules.

Chapter 2 Option Contracts

Article 5 An “option contract” refers to a standardized contract which is centrally created by the Exchange and entitles the buyer to buy or sell the agreed underlying assets at a specified price and time in the future.

Article 6 The main terms of an option contract include the product name, contract type, trading unit, price quotation, minimum price fluctuation, price limit, contract month, trading hours, Last Trading Day, expiration date, strike price, exercise style, product code, and the listing exchange.

Article 7 The underlying asset of an option contract is the object to which the rights and obligations of the buyer and the seller are attached.

Options on futures are referred to as futures options.

Article 8 Option contracts are classified by type into call options and put options.

Call option is an option that entitles the buyer to purchase the underlying assets at a specified price and time in the future and obligates the seller to perform the corresponding obligations.

Put option is an option that entitles the buyer to sell the underlying assets at a specified price and time in the future and obligates the seller to perform the corresponding obligations.

Article 9 The trading unit of an option contract is “lot.” Options trading must be conducted in multiples of one (1) lot. The quantity of the underlying assets of a product corresponding to one lot is specified in the product’s option contract.

Article 10 An option contract has the same price quotation as its underlying assets.

Article 11 “Minimum price fluctuation” refers to the minimum change in price of an order in an option contract.

Article 12 A futures option contract has the same price limit as the underlying futures contract (the settlement price of the underlying futures contract on the previous trading day multiplied by the applicable percentage).

Article 13 The “contract month” of a futures option contract refers to the delivery month of the underlying futures contract.

The Exchange may adjust the contract month of an option contract based on market conditions.

Article 14 “Last Trading Day” of an option contract refers to the last day on which the contract may be traded.

Article 15 The “expiration day” of an option contract refers to the last trading day on which the buyer may exercise the option.

Article 16 “Strike price” is the price specified by the option contract at which the buyer is entitled to buy or sell the underlying assets at a particular time in the future.

“Strike price interval” is the difference between two successive strike prices.

The strike price is a multiple of the strike price interval.

The Exchange may adjust the number and interval of strike prices of an option contract based on market conditions.

Article 17 Exercise styles include American, European, and other styles specified by the Exchange. American-style options can be exercised on any trading day up to and including the expiration date; European-style options can be exercised only on the expiration date.

Article 18 The product code of an option contract consists of the product code of the underlying asset, contract month, call option code (C) or put option code (P), and strike price. For a serial option, the product code also includes “MS” to indicate an option as a serial contract.  

Chapter 3 Trading

Article 19 A Non-futures brokerage Member (“Non-FB Member”) or client shall engage in options trading using the same trading code as in futures trading. Any Non-FB Member or client without a trading code shall apply for one at the Exchange in accordance with the rules on futures trading.

Article 20 The Exchange implements investor suitability requirements for options trading. The specifics of the investor suitability requirements will be separately prescribed by the Exchange.

Article 21 The Exchange implements a market maker system for options trading. The specific rules governing market makers will be separately prescribed by the Exchange.

Article 22 Non-FB members and clients may request for quotes (“RFQ”) from market makers. The contracts available for RFQ and the frequency of RFQ are as determined and publicly announced by the Exchange, and may be adjusted based on market conditions.

The Exchange regulates the RFQs in the market. In the event of any abnormality in the RFQs, the Exchange may take such measures as giving a reminder call and requiring a situation report, to which the relevant Members, overseas brokers, and clients shall provide assistance and cooperation. Each futures broker and overseas broker shall supervise the RFQs of its clients and require them to submit reasonable quote requests.

Article 23 The price of an option contract refers to the amount of premium for each quotation unit of the option contract.

“Premium” refers to the payment made by an option buyer to obtain the rights under the option.

Article 24 The relevant rules for futures apply identically to the opening price, closing price, high price, low price, last price, price change, high bid, low ask, buying quantity, selling quantity, trading volume, open interest, call auction, and order matching and execution of options.

Article 25 The minimum and maximum order size of a limit order, market order, and spread order in options trading is subject to the same rules as in futures trading and may be adjusted by the Exchange based on market conditions.

An order qualifier must be attached to each option spread order. Supported order qualifiers include fill-and-kill (FAK) and fill-or-kill (FOK).

Article 26 Supported option spread orders are:

(1) Long straddle, which refers to the simultaneous buying of a call and a put of the same underlying asset, expiration date, strike price, and quantity;

(2) Short straddle, which refers to the simultaneous selling of a call and a put of the same underlying asset, expiration date, strike price, and quantity;

(3) Long strangle, which refers to the simultaneous buying of a call and a put of the same underlying asset, expiration date, and quantity, but with a higher strike price for the call and lower strike price for the put;

(4) Short strangle, which refers to the simultaneous selling of a call and a put of the same underlying asset, expiration date, and quantity, but with a higher strike price for the call and lower strike price for the put.

The Exchange does not accept spread orders during a call auction.

Article 27 Option contracts are listed by the following principles:

(1) the listing time of the option contracts for a new contract month is as provided in the contract specifications;

(2) each new listing comprises one at-the-money (“ATM”) contract and several in-the-money (“ITM”) and out-of-the-money (“OTM”) contracts;

(3) following the listing of an option contract for trading, the Exchange will, after market close on each trading day, list option contracts with new strike prices based on the settlement price and price limit of the underlying futures contract and the provisions of the option contract, until market close on the trading day preceding the expiration date, upon which no open contracts with new strike prices will be listed; and

(4) the listing benchmark price of an option contract will be determined and announced by the Exchange.

The term “at-the-money” in Item (2) of this Article refers to an option contract whose strike price is equal to (or close to) the settlement price of the underlying asset on the preceding trading day (“previous settlement price”). Where the average of the two adjacent strike prices is equal to the settlement price of the underlying asset, the higher one shall be taken as the ATM option’s strike price. The term “in-the-money” refers to a call with a lower strike price than the ATM option or a put with a higher strike price than the ATM option. The term “out-of-the-money” refers to a call with a higher strike price than the ATM option or a put with a lower strike price than the ATM option.

Article 28 An option contract may be closed out by liquidation, exercise, or abandonment.

Liquidation means the close-out of a call by selling the same quantity of the same option contract or the close-out of a put by buying the same quantity of the same option contract. “Same option contracts” refer to option contracts of the same underlying asset, type, contract month, expiration day, and strike price.

“Exercise” means the close-out of an option contract by the buyer by duly exercising its right to buy or sell the underlying asset at the strike price or settling the cash difference at the prescribed settlement price.

“Abandonment” means the close-out of an option contract by the buyer by not exercising its right under the contract upon the expiration of the contract.

Article 29 A Non-FB Member or client may request for the mutual close-out of the long and short speculative option positions it holds under the same trading code. The positions netted are deducted from the option’s current-day open interest and accounted for in the trading volume. The time and specific manner of the request will be separately announced by the Exchange.

Chapter 4 Exercise and Fulfillment

Article 30 A client shall exercise and fulfill its options at the Exchange either through its Member directly or through a Member by way of its carrying overseas broker, and in the name of that Member.

Article 31 An option buyer is entitled to submit an exercise or abandon request within the time window specified by the Exchange.

An option seller has the obligation to fulfill the option contract. “Fulfillment,” with respect to an option seller, means the buying or selling a certain quantity of the underlying assets at the strike price specified in the contract or the settlement of the cash difference at the prescribed settlement price when the buyer chooses to exercise the option.

Upon the exercise of options by a buyer, the Exchange will assign them to sellers’ positions in the order of speculative positions first, arbitrage positions second, and hedging positions third. Positions within the same type will be assigned by descending age.

The Exchange may adjust when an exercise or abandon request may be submitted on the expiration day.

Article 32 A Non-FB Member or client may request for the netting of the long and short speculative futures positions it holds under the same trading code following exercise or fulfillment, provided the size of this netting does not exceed the larger of the long speculative futures positions and the short speculative futures positions it obtains through the exercise or fulfillment. The positions netted are deducted from the futures’ current-day open interest and accounted for in the trading volume. The time and specific manner of the request will be separately announced by the Exchange.

Article 33 Upon the exercise and fulfillment of a call option on futures, the buyer will obtain a long position in the underlying futures contract at the strike price and the seller will obtain a short position in the underlying futures contract at the same strike price. Upon the exercise and fulfillment of a put option on futures, the buyer will obtain a short position in the underlying futures contract at the strike price and the seller will obtain a long position in the underlying futures contract at the same strike price.

Article 34 Before an option contract expires, the relevant Member and overseas broker shall remind its clients to properly manage their option positions.

Article 35 Option positions for which no exercise or abandonment request has been submitted within the prescribed time limit will be handled as follows at time of clearing on the expiration date:

(1) call options with a strike price lower than the settlement price of the underlying asset on the current day will be automatically exercised;

(2) put options with a strike price higher than the settlement price of the underlying asset on the current day will be automatically exercised; and

(3) all other options will be automatically abandoned.

Article 36 Any buyer of futures option that chooses to exercise it shall ensure its funds balance meets the Trading Margin requirement for the futures positions resulting from the exercise.

The buyer’s carrying Member or overseas broker shall not accept the exercise request if the buyer has insufficient funds. Where a buyer meets the criteria under Item (1) or (2) of Article 35 of these Rules but has insufficient funds, an abandon request shall be submitted to the Exchange on the buyer’s behalf either by the buyer’s carrying Member or by its carrying overseas broker through a Member.

Chapter 5 Clearing

Article 37 The same Dedicated Settlement Account and Dedicated Funds Account in futures trading are used for options trading by a Member.

Article 38 An option buyer pays the premium but not the Trading Margin; an option seller receives the premium and pays the Trading Margin.

Article 39 An option buyer pays the premium based on the execution price when opening a position, and receives the premium based on the execution price when closing a position.

An option seller receives the premium based on the execution price when opening a position, and pays the premium based on the execution price when closing a position.

The Exchange will adjust the Settlement Reserve balance of each Member in accordance with the premiums the Member has paid and received.

Article 40 The Exchange collects Trading Margin from an option seller at the time of position opening at the margin rate as of the time of clearing on the preceding trading day, and releases the corresponding Trading Margin to the option seller at the time of position close-out.

Article 41 At daily clearing, the Exchange calculates and collects Trading Margin from each option seller based on the current day’s settlement price, collects the transaction fees and exercise (assignment) fees from each option buyer and seller based on the trading volume and exercise (fulfillment) volume, and then transfers the payables and receivables and increases or decreases each Member’s Settlement Reserve accordingly.

The rates of the service fees are as determined by the Exchange and may be adjusted based on market conditions.

Article 42 At daily clearing, the Exchange automatically confirms eligible option and futures positions as covered option spread positions, which are classified into covered call spread and covered put spread, and preferentially combine the eligible regular option positions and futures positions for confirmation.

Covered call spread refers to the simultaneous holding of a short position in a call option and an identically sized long position in the underlying futures. Covered put spread refers to the simultaneous holding of a short position in a put option and an identically sized short position in the underlying futures contract.

Article 43 The settlement price of an option contract is determined as follows:

(1) On any day other than the Last Trading Day, the current day’s settlement price is the option’s theoretical price determined based on its implied volatility;

(2) On the Last Trading Day, the settlement price is calculated as follows:

Settlement price of a call = Max(settlement price of the underlying asset ? strike price, 0);

Settlement price of a put = Max(strike price ? settlement price of the underlying asset, 0);

(3) The Exchange reserves the right to adjust a clearly unreasonable settlement price.

The term “implied volatility” as referred to Item (1) of this Article means the price volatility of the underlying asset given by an option pricing model based on the prices of the option market.

Article 44 With respect to the buyers and sellers of exercised or abandoned options, the Exchange will, at the time of clearing, reduce their option positions and release the sellers’ Trading Margin accordingly.

The futures positions resulting from the exercise of options will not be included in the calculation of the current day’s settlement prices of the corresponding futures contracts.

Chapter 6 Risk Management

Article 45 Options trading risks are managed through margin requirements, price limit, position limit, trading limit, the large trader reporting regime, forced liquidation, and the risk warning regime.

Article 46 The Exchange implements margin requirement for options trading. The Trading Margin collected from a seller of a futures option is the greater of:

(1) option’s settlement price × underlying futures’ trading unit + underlying futures’ Trading Margin ? half of the option’s out-of-the-moneyness;

(2) option’s settlement price × underlying futures’ trading unit + half of the underlying futures’ Trading Margin;

where,

Out-of-the-moneyness of a call option = Max(strike price ? underlying futures’ settlement price, 0) × underlying futures’ trading unit;

Out-of-the-moneyness of a put option = Max(underlying futures’ settlement price ? strike price, 0) × underlying futures’ trading unit.

Article 47 The Trading Margin for a short straddle or short strangle is the sum of (i) the larger of the Trading Margin requirement for the short call and that for the short put and (ii) the premium for the call or put, whichever has a lower Trading Margin requirement.

Article 48 The Trading Margin for a covered option spread is the sum of the premium and the underlying asset’s Trading Margin requirement.

Article 49 Options trading is subject to price limit. The limit prices for a futures option is calculated as follows:

(1) Upper limit price = option’s previous settlement price + underlying futures’ previous settlement price × underlying futures’ upper price limit percentage;

(2) Lower limit price = Max(option’s previous settlement price ? underlying futures’ previous settlement price × underlying futures’ lower price limit percentage, option’s minimum price fluctuation).

Article 50 An option contract is in a “Limit-Locked Market” if, within the five (5) minutes before market close, there are only buy (sell) orders but no sell (buy) orders placed at the limit price, or that any buy (sell) order is instantly filled without deflecting the execution price away from the limit price.

A Limit-Locked Market is not deemed to have occurred if an option contract’s previous settlement price is at or below the current day’s price limit and, within the five (5) minutes before market close, there are only sell orders but no buy orders placed at the lower limit price, or that any buy order is instantly filled without deflecting the execution price away from the lower limit price.

Article 51 An option contract that is in a same-direction Limit-Locked Market for three (3) consecutive trading days will not be subject to forced position reduction.

Article 52 An option contract is suspended from trading at any time the underlying futures contract is suspended from trading. For any option contract that is suspended from trading throughout its Last Trading Day, its Last Trading Day and expiration day will be postponed to the following trading day.

Article 53 The Trading Margin rate and price limit of an option contract will be adjusted accordingly at any time when the Trading Margin rate and price limit of the underlying futures contract is adjusted.

Article 54 Options trading is subject to position limit. “Position limit” in relation to options trading refers to the maximum size of speculative positions (calculated on a single-counted basis) in all options of the same underlying asset and contract month that a Non-FB Member or client is permitted to hold by the Exchange.

Article 55 The single-counted position size in options is the sum of long call positions and short put positions, or the sum of long put positions and short call positions.

The speculative positions held by a Non-FB Member or client shall not exceed the position limit prescribed by the Exchange. The position limit for option contracts is as determined and publicly announced by the Exchange, and may be adjusted based on market conditions.

The position limit for a Non-FB Member or client that engages in hedging, arbitrage, or market making is governed by the relevant rules of the Exchange.

Article 56 The Exchange may enforce trading limit on option contracts, the specifics of which are governed by the Risk Control Rules of Zhengzhou Commodity Exchange.

Article 57 Any Non-FB Member or client that exceeds the futures position limit due to exercise of options will be subject to forced liquidation in accordance with the relevant rules.

Article 58 Options trading requires large trader reporting. The triggering conditions and the documents required for large trader reports are governed by the Risk Control Rules of Zhengzhou Commodity Exchange.

Article 59 Options trading is subject to forced liquidation. The Exchange will carry out forced liquidation in a manner that maximizes the liquidity and the funds released if:

(1) a Member lets its Settlement Reserve balance to fall below zero (0) and fails to meet the relevant balance requirement within the prescribed time limit and to provide the liquidation list; or

(2) a Non-FB Member or client has exceeded the applicable position limit.

The other circumstances for forced liquidation and the corresponding principles and procedures are governed by the Risk Control Rules of Zhengzhou Commodity Exchange.

Article 60 The Exchange implements a risk warning regime for options trading. The circumstances and methods for risk warning are governed by the Risk Control Rules of Zhengzhou Commodity Exchange.

Chapter 7 Information Management

Article 61 The options trading information of the Exchange refers to the market data arising from the options trading activities at the Exchange, the statistics on options trading, the announcements published by the Exchange, and other information to be published as required by the CSRC.

Article 62 The Exchange holds ownership right to the options trading information. The options trading information is managed and released by the Exchange. The Exchange may commercialize and manage the options trading information independently, in collaboration with a third party, or delegating it to a third party. Without the consent of the Exchange, no organization or individual may release such information or use it for commercial purposes.

Article 63 The Exchange releases real-time, delayed, daily, weekly, and monthly options market data; daily, monthly, and annual options trading statistics; and other trading information required to be disclosed under laws and regulations.

Article 64 “Real-time market data” refer to the market data released as the trading activities take place during the trading hours. “Delayed market data” refer to the market data released a certain amount of time after the corresponding trading activities have taken place. Real-time and delayed market data include product code, last price, price change, trading volume, open interest, change in open interest, buying price, selling price, buying quantity, selling quantity, settlement price, opening price, closing price, high price, low price, and previous settlement price.

Article 65 The daily options trading information is released after the end of each trading day. Such information includes:

(1) Daily market data: product code, opening price, high price, low price, closing price, previous settlement price, settlement price, price change, trading volume, turnover, open interest, change in open interest, delta, implied volatility, and exercise volume;

(2) Trading volumes and long/short positions of the top 20 Members in the nearby month and active month contracts;

In Item (1) of this Article, “delta” refers to the ratio between the change in the price of an option contract to the change in the price of the underlying asset; “exercise volume” refers to the quantity of option contracts closed out through the exercise of the options.

Article 66 The weekly options trading information is released after the end of the last trading day of each week. Such information includes product code, weekly opening price, high price, low price, weekly closing price, price change (difference between current week’s ending closing price and preceding week’s ending settlement price), weekly ending settlement price, trading volume, turnover, open interest, change in open interest (difference between current week’s ending open interest and preceding week’s ending open interest), and exercise volume.

Article 67 The monthly options trading information is released after the end of the last trading day of each month. Such information includes product name, monthly opening price, high price, low price, monthly closing price, price change (difference between current month’s ending closing price and preceding month’s ending settlement price), monthly ending settlement price, trading volume, turnover, open interest, change in open interest (difference between current month’s ending open interest and preceding month’s ending open interest), and exercise volume.

Article 68 The annual options trading information is released after the end of the last trading day of each year. Such information includes:

(1) Total and product-specific trading volume and turnover; and

(2) Total and product-specific exercise volume.

Article 69 The Exchange is not liable if the normal course of trading for a Member or client is affected by a disruption in the real-time market data relay services of an information service provider or media outlet.

Article 70 No organization or individual may release any false or misleading information.

Chapter 8 Ancillary Provisions

Article 71 Any matter not covered by these Rules is governed by the other relevant Rules of the Exchange.

Article 72 If there is any inconsistency between the other Rules of the Exchange and these Rules, these Rules shall prevail in relation to any options-related matters.

Article 73 Any violation of these Rules will be handled in accordance with the Rules of Zhengzhou Commodity Exchange on Violations.

Article 74 The Exchange reserves the right to interpret these Rules.

Article 75 These Rules take effect on March 3, 2025.

(This English version is for reference ONLY. In case of any inconsistency between the different language versions, the Chinese version prevails.)