I do covered calls (sell to open) at Schwab...Many would say this is the most conservative option out there. When the option gets bought, Schwab will cover their back side. They will say (in the execution page), potential loss all...The total price of the underlying stock minus the option money. Eyes wide open...
Do option holders have any recourse for expirations during a Presidential Order to close exchanges?
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"Nothing on the President's powers, force majeure, or even insolvency. https://www.theocc.com/components/docs/riskstoc.pdf
Searches for options during 9/11 only talk about put buying before the event.
3 months and less expiries don't look low systemic risk during these types of scenarios.
Nothing on the President's powers, force majeure, or even insolvency. https://www.theocc.com/components/docs/riskstoc.pdf
Searches for options during 9/11 only talk about put buying before the event.
3 months and less expiries don't look low systemic risk during these types of scenarios."
Read the ODD again and is discusses what OCC powers if the exchanges are unable to open.
I've also posted a post 9/11 study of the alleged insider trading.
Searches for options during 9/11 only talk about put buying before the event.
3 months and less expiries don't look low systemic risk during these types of scenarios.
Nothing on the President's powers, force majeure, or even insolvency. https://www.theocc.com/components/docs/riskstoc.pdf
Searches for options during 9/11 only talk about put buying before the event.
3 months and less expiries don't look low systemic risk during these types of scenarios."
Read the ODD again and is discusses what OCC powers if the exchanges are unable to open.
I've also posted a post 9/11 study of the alleged insider trading.
Quote it.
They do not address this possibility directly but allude to it by listing more common occurrences like circuit breakers. The Act isn't cited or any other detail.
There is nothing about redating.
They even go on to say they can restrict exercising on top of trading halts.
Short dated option holders could easily by wiped out with the writers keeping all the premiums for free.
Page 70 (the image of a single paragraph) is below and deals with the short side. The long side is the pdf attachment.
Short version, an exercise restriction has never remained in place until expiration, but could in theory.
@ajacobson, do you know where one might find the actual language of the options contract?
I'm under the presumption that unless the restriction is explicitly disclosed in the contract that it would take an act of congress (literally) to undo a contract.
Attachments
Yes, "Other Risks" is what I was referring to.
No, the risks are clearly described. The options may expire worthless during an Order to close the markets. The contracts won't be cancelled. They simply won't trade and at worst will be forbidden to exercise.
"Not trading" is not the same as "not exercising". Unless there's a provision written into the actual contract itself regarding restrictions on exercise, the rights survive EVERYTHING short of an act of congress signed by the president. It's the contract clause of the constitution that governs that. So I'd be interested in the exact language contained in the contract itself.
You linked to the very words regarding restricted exercises in your jpg.
No, that's the characteristics and risks. It's a disclosure document. I'm interested in the actual contract language. The disclosure does not form a part of the contract.