Options Unit 4-6

Front 1

Volatility Index Fund (VIX)

Back 1

VIX options are European style contracts based on the S&P 500 index and are traded 9:30 am to 4:15 pm ET on the CBOE. They use a multiplier of 100 and expire each month on a Wednesday.

Front 2

Foreign Currency Options

Back 2

Foreign currency options expire on the last day of trading which is the third Friday of the expiry month. This is the same for both standard equity and index option contracts. All listed currency options are European-style contracts. European-style contracts can only be exercised by the holder on the last trading day before expiration.

Front 3

Flex Options

Back 3

Exchange Traded and Cleared by the OCC. FLEX option are subject to position limits and require a minimum number of contracts before any series will be issued.

Front 4

Buying puts is the most effective strategy to hedge the risk of decline in a stock portfolio's market value. To determine the number of option contracts necessary to hedge

Back 4

divide the portfolio value ($1.7 million) by the market value of the index (68,000). Multiply the result (25) by the beta of 1.20. The result is 30 contracts.

Front 5

The documentation order of an options account

Back 5

1. Customer info. must be obtained

2. The account must be approved

3. The first order can be entered and if filled must be approved promptly

4. The options agreement need only be returned by the 15th day after the account has been approved

Front 6

When must Customers be furnished with the options disclosure documents?

Back 6

Before or at the time their accounts receive ROP's approval

Front 7

Retail Communication

Back 7

any written or electronic communication that is distributed to more than 25 retail investors within any 30 calendar day period

Front 8

Correspondence

Back 8

any written or electronic communication that is distributed to or made available to 25 or fewer retail investors