In Shanghai, investors have a different 'option'

Ee Chuan Ng, head of Bloomberg China, said the introduction of stock options represented a significant development in China's capital markets and a move toward greater financial reform and market liberalization.

"For this new hedging tool to positively contribute to a more robust equity market, liquidity will be an imperative factor," he said.

Analysts said the short-term effect of options trading is usually an immediate boost in the prices of target stocks or indexes. But in the long run, the trading tool will help curtail market volatility.

Liao Hong, chief economist at investment bank China International Capital Corp Ltd, said that options trading will improve liquidity and investors' confidence in the stock market.

"It is just the beginning for China to develop and improve its derivative market. More complicated derivative tools can be expected as the country will accelerate its financial innovation in the next five to 10 years," Liang wrote in a research note.

Some analysts anticipate that the regulator may soon expand options trading to the stock index and individual stocks.

Securities firms are believed to be among the first to benefit from the launch of the option trading as it will boost their revenue. Shares of securities firms moved up 4.13 percent and led the gain of the Shanghai Composite Index.