Comparing U.S. and Hong Kong Stock Options

Hello. This first module establishes a practical contract reference for trading across U.S. and Hong Kong markets. You already know the basic language of calls, puts, premiums, and assignment; the aim here is narrower and more operational: build a comparison you can rely on before sizing or managing a live trade.

We will compare a standard, unadjusted monthly AAPL equity option in the U.S. with a standard monthly Tencent Holdings option in Hong Kong (SEHK 0700; HKATS code TCH). These are examples, not universal templates: U.S. adjusted contracts and HKEX stock-option classes can have different deliverables or contract sizes.

By the end, you should have a completed reference sheet and a short verification routine for your broker platform.

---

First principle: the option premium is not the cash amount

An option-chain premium is quoted per share. The actual premium paid or received is the quote multiplied by the contract size:

$$\text{Contract premium}=\text{Quoted premium}\times \text{Contract size}$$

For a U.S. standard equity option quoted at $US\$3.20$, a 100-share contract represents:

$$US\$3.20\times 100=US\$320$$

For a Tencent option quoted at $HK\$4.50$, with TCH’s 100-share contract size:

$$HK\$4.50\times 100=HK\$450$$

The two selected examples happen to have the same 100-share multiplier. That does not mean Hong Kong stock options universally have a 100-share multiplier. HKEX sets contract size separately for each stock-option class, and sizes can be 50, 100, 500, 1,000 shares, or materially larger.

This distinction matters immediately for live trading. A position that looks cheap in a Hong Kong option chain can represent a much larger cash exposure than expected if the underlying’s contract size is 2,000 or 5,000 shares.

---

Verify the U.S. reference contract

For the U.S. side, use a normal, unadjusted AAPL monthly call or put as the working example. The OCC specifications below establish the default terms for standard U.S. equity options; your broker’s contract-details screen confirms that the particular AAPL series has not been adjusted by a corporate action.

For a standard U.S. monthly AAPL option, record the following:

• Multiplier: 100 AAPL shares per standard contract.
• Quote currency: U.S. dollars. A premium quoted in points has a cash value of $US\$100$ per point.
• Monthly expiration convention: third Friday of the expiration month.
• Exercise style: American. The holder may exercise on any business day through expiration.
• Settlement method: physical delivery of AAPL shares upon exercise or assignment, with stock delivery on $T+1$ following exercise.
• Regular trading hours: 9:30 a.m. to 4:00 p.m. Eastern Time.

Two details deserve special attention:

1. “Expiration” is not merely a date on a chart. It is the point after which the option no longer exists. Your broker may impose an exercise-instruction cutoff before the clearing deadline, so its operational deadline is the one you must follow.

2. “100 shares” is a default, not a promise for every chain row. Following stock splits, special dividends, mergers, or other corporate actions, a contract can be adjusted. Before trading, look for the platform’s deliverable, multiplier, or adjusted designation.

---

Verify the Hong Kong reference contract

Tencent provides a useful Hong Kong comparison because it is a liquid, widely recognized stock-option class and HKEX lists a 100-share contract size for TCH. That makes the multiplier easy to compare with a standard U.S. equity option while still highlighting the different expiry calendar, trading session, currency, and fee structure.

For a standard monthly Tencent TCH option, record:

• Multiplier: 100 Tencent shares per contract.
• Quote currency: Hong Kong dollars, quoted per share.
• Monthly expiration convention: the business day immediately preceding the last business day of the contract month.
• Exercise style: American. HKEX states that exercise may be submitted up to 6:45 p.m. on a business day, including the last trading day.
• Settlement method: physical delivery of Tencent shares. Option premium settles on $T+1$; stock transfer following exercise settles on $T+2$.
• Trading hours: 9:30 a.m. to 12:00 noon, then 1:00 p.m. to 4:00 p.m. Hong Kong time.
• Exchange-stated charges: Tencent is a Tier 1 stock-option class, so the published trading tariff is $HK\$3.00$; the stated exercise fee is $HK\$2.00$. Brokerage commission is negotiable.

For Hong Kong monthly options, do not reduce the rule to “the last Thursday” or “the last Friday.” The actual rule is based on business days, so public holidays and month-end calendars matter. Check the series’ displayed expiry date before entering a position.

---

Completed comparison sheet

Use this as a working reference. The “selected contract” wording is deliberate: it prevents an accurate fact about one contract from becoming a false assumption about an entire market.

Contract term	U.S.: standard monthly AAPL equity option	Hong Kong: standard monthly Tencent TCH option	Trading implication
Underlying / exchange context	AAPL, standard U.S. listed equity-option contract	Tencent Holdings, SEHK 0700; HKATS code TCH	Confirm the exact option class and series, not just the stock name.
Contract multiplier	100 AAPL shares	100 Tencent shares	Both selected examples use 100 shares, but HKEX sizes vary by class.
Premium quote currency	U.S. dollars	Hong Kong dollars	A quote is in the market’s trading currency, not necessarily your account’s base currency.
Premium quotation	Points; one point equals $US\$100$ for a standard 100-share contract	HK dollars per share; multiply by contract size	Always calculate the contract-level debit or credit before entering an order.
Monthly expiration convention	Third Friday of the expiration month	Business day immediately before the last business day of the month	The same calendar label, such as “June,” can imply very different final trading dates.
Weekly listings	May exist under exchange listing programs; do not assume every series is monthly	TCH is listed by HKEX as having weekly expiries	Read the exact expiry date and avoid selecting a weekly series by mistake.
Exercise style	American	American	A short in-the-money leg can be assigned before expiry in either market.
Settlement after exercise	Physical share delivery; stock delivery $T+1$ after exercise	Physical share delivery; premium $T+1$, stock transfer $T+2$	Closing a spread before expiry is usually operationally simpler than relying on exercise mechanics.
Regular trading hours	9:30 a.m.–4:00 p.m. ET	9:30 a.m.–12:00 noon and 1:00 p.m.–4:00 p.m. HKT	Hong Kong has a midday break; U.S. and Hong Kong sessions occur in different time zones and U.S. daylight saving changes their time difference.
Typical stated charges	Broker commission schedule plus possible exchange and regulatory pass-through charges; no universal retail tariff appears in the OCC contract specification	Tier 1 trading tariff $HK\$3.00$; $HK\$2.00$ exercise fee; brokerage commission negotiable	Costs are part of trade risk, especially for multi-leg structures and small expected moves.

Charges: distinguish a verified exchange fee from a broker estimate

This category requires particular care. Contract specifications can tell you the exchange’s published tariff, but they cannot tell you every charge your broker will pass on to your account.

For the Tencent example, the HKEX contract summary supplies two exchange-stated figures:

• Tier 1 trading tariff: $HK\$3.00$
• Exercise fee: $HK\$2.00$

Those are not necessarily your entire trading cost. Your broker can charge its own commission and may display further clearing, platform, or pass-through fees.

For the U.S. example, the OCC specifications define the product but do not provide one universal customer commission. A retail broker may advertise zero commission while still applying per-contract, exchange, and regulatory charges. Therefore, do not enter a generic U.S. fee number into a “verified” comparison. Instead, copy the exact per-contract and per-order charges from your own broker’s current fee schedule.

A useful all-in cost record is:

$$\text{Estimated transaction cost}=\text{Broker commission}+\text{Exchange and clearing fees}+\text{Regulatory fees}$$

For a multi-leg spread, do this separately for entry and exit. Four legs can turn a seemingly negligible per-contract charge into a meaningful percentage of the planned maximum profit.

---

A verification routine before a live order

A reference table becomes reliable only when you connect it to the exact contract in your platform. Use this brief procedure whenever you trade an unfamiliar option class or expiry:

1. Identify the precise series. Record the underlying, call or put, strike, and displayed expiry date. For Hong Kong, also record the HKATS code; for this example, it is TCH.

2. Check the deliverable and multiplier. Confirm that the U.S. AAPL contract is unadjusted and represents 100 shares. Confirm the HKEX class-specific size rather than assuming it from the stock’s board-lot convention.

3. Convert premium to contract cash. Multiply the displayed per-share premium by the multiplier. If your account reports in another base currency, keep the option premium in its trading currency first; assess foreign-exchange conversion separately.

4. Check the final-trading and exercise mechanics. Verify the actual expiry date, broker exercise cutoff, automatic-exercise policy, and whether you could accept the resulting share position and funding requirement.

5. Capture costs from the broker’s order preview. Before sending a live order, compare the displayed estimated commission and fees with the fee schedule. For spreads, inspect the cost across every leg.

6. Save the result. A screenshot or journal entry containing the contract details, displayed multiplier, expiry, and expected charges is more useful than relying on memory.

This is especially important for a $US\$5,000$–$US\$25,000$ account. A wrong multiplier, an unplanned share delivery, or a fee-heavy multi-leg position can have a disproportionately large effect on account risk.

---

Key takeaways

A standard U.S. AAPL option and the selected HKEX Tencent TCH option both represent 100 shares and are American-style, physically settled options. But they differ in quote currency, monthly expiration convention, trading-session structure, settlement timing, and fee disclosure.

The practical rules are:

• Treat contract size as class-specific, especially in Hong Kong.
• Treat expiry as an operational date, not just a month label.
• Treat exercise and assignment as potential share-delivery events.
• Treat broker costs as position inputs, not an afterthought.
• Verify the exact series on your broker platform, particularly for adjusted U.S. contracts and all fee estimates.

Next, the course moves from contract mechanics to short-horizon option behavior: estimating an option’s price change from a small underlying move using delta.