What is the name of the Options Disclosure Document?
Prior to buying or selling an option, investors must read a copy of the Characteristics and Risks of Standardized Options, also known as the options disclosure document (ODD). It explains the characteristics and risks of exchange traded options.
When must a client receive an options Disclosure Document?
In addition to setting forth what information must be disclosed in the ODD, Rule 9b-1 requires brokers and dealers to furnish a copy of the ODD to a customer before or at the time they approve that customer’s account or accept the customer’s order to trade options covered by the ODD.
What is OCC odd?
The options disclosure document (ODD) is a publication issued by the Options Clearing Corporation (OCC) that serves as an important guide for options traders. The comprehensive document—formally titled Characteristics and Risks of Standardized Options—is particularly essential for novice options traders.
When must the options Disclosure Document Odd be furnished to a customer?
Firms must deliver the ODD supplements no later than the time a customer receives a confirmation of a transaction in the category of options to which the supplement pertains. Rule 2360(b)(11)(A)(3) also requires FINRA to advise firms when revisions to the ODD are made.
Which of the following documents must be provided to the customer prior to approval of an options account?
Options regulations dictate that an Options Disclosure Document must be provided to the customer prior to the account being approved for options transactions. This would especially be the case in relation to accounts where customers intend to perform uncovered options transactions.
What is OCC document?
OCC – Options Disclosure Document.
What is OCC option?
The Options Clearing Corporation (OCC) serves as a central clearinghouse and regulator for listed options traded in the United States under the auspices of the SEC and CFTC. The OCC clears exchange-traded transactions in options contracts, interest rate composites, and single-stock futures.
WHO issues an option?
Exchange-traded options contracts are listed on exchanges, such as the Chicago Board Options Exchange (CBOE), and overseen by regulators, like the Securities and Exchange Commission (SEC).
Is an option an asset?
Options are typically acquired by purchase, as a form of compensation, or as part of a complex financial transaction. Thus, they are also a form of asset and have a valuation that may depend on a complex relationship between underlying asset value, time until expiration, market volatility, and other factors.
How are call options cleared?
The option writer sells his contract to the OCC and the option buyer buys it from the OCC. … Under its SEC jurisdiction, OCC clears transactions for put and call options on common stocks and other equity issues, stock indexes, foreign currencies, interest rate composites and single-stock futures.
Are all options OTC?
Options that are traded between private parties in the over the counter market and not through exchanges are called over the counter options. While exchange traded options are executed and settled through clearinghouses, there is no such mechanism for over the counter option trades.
Where are options cleared?
Options Clearing Corporation (OCC) is a United States clearing house based in Chicago.
Are options listed derivatives?
Options are one category of derivatives and give the holder the right, but not the obligation to buy or sell the underlying asset. Options are available for many investments including equities, currencies, and commodities.
What are the types of options?
There are two types of options: call and put. A call gives the buyer the right, to buy the underlying asset at the specified strike price. A put gives the buyer the right, to sell an asset at a specified strike price as in the contract.
What are options?
Options are financial derivatives that give buyers the right, but not the obligation, to buy or sell an underlying asset at an agreed-upon price and date. Call options and put options form the basis for a wide range of option strategies designed for hedging, income, or speculation.
Who writes option contracts?
Traders write an option by creating a new option contract that sells someone the right to buy or sell a stock at a specific price (strike price) on a specific date (expiration date). In other words, the writer of the option can be forced to buy or sell a stock at the strike price.
Who is the holder of an option?
Options are a contract between two market participants: the writer and the holder. The writer is the option provider, and the holder is the person who has the right to buy or sell the asset. In return for that right, the holder pays the writer a premium.
Who are the option sellers?
The person who sells an option in return for a premium and is obligated to perform when the holder exercises his right under the option contract. Also referred to as the writer or granter.
Are option contracts revocable?
A promise to keep an offer open that is paid for. With an option contact, the offeror is not permitted to revoke the offer because with the payment, he is bargaining away his right to revoke the offer.
What is irrevocable option?
The irrevocable clause states a date and time up to which time the offer is irrevocable. Before the time on the specified date, the party offering cannot revoke their offer. The irrevocable clause usually states that when the time and the date passes the offer becomes null and void.
Does a rejection terminate an option contract?
If the offeree rejects the offer, his power of acceptance is terminated even if the power of acceptance would not have otherwise lapsed.