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FLEX Options Product Specifications

Description

FLEX options are customizable products where the investor can set the terms for the tradable contract and have the security of an exchange-traded product. The exercise style, expiration date and strike price can all be chosen by the investor to create a new product that is not currently being traded at an exchange. In general, investors set the criteria and have their brokerage firm solicit the best possible market-price from different market participants.

Unit of Trade

Equity or ETF: 100 shares per option contract.
Index: One contract equals $100 (the index multiplier) times the index level.

Premium Quotations

Stated in points. One point equals $100.

Strike Price Intervals

The investor selects the strike price for the FLEX contract.

Exercise Style

The investor chooses between either American or European exercise when the contract terms are chosen.

Exercise Settlement Time

Equity and ETF FLEX settlement will occur on the second (T+2) business day following exercise. For Index FLEX, settlement will be the first business day following exercise.

Expiration Dates

The investor selects the date for the FLEX options to expire, within exchange rules.

Exercise Settlement Price for Index FLEX

Cash-settled FLEX options on index products will derive their settlement price depending on whether the investor has selected a.m. or p.m. settlement for that particular FLEX option. The dollar difference between the index settlement value and the strike price of the contract multiplied by 100 will be the value of the contract. (Note: See product specifications for each index as there may be different methods of calculation.)

Position Limits

No position limits for equity or ETF FLEX, however reporting obligations do apply. Check with exchange for Index limits.

Minimum Customer Margin

Purchases of puts or calls with nine months or less until expiration must be paid for in full. Writers of uncovered equity puts or calls must deposit / maintain 100% of the option proceeds* plus 20% of the aggregate contract value (current equity price x $100) minus the amount by which the option is out-of-the-money, if any, subject to a minimum for calls of option proceeds* plus 10% of the aggregate contract value and a minimum for puts of option proceeds* plus 10% of the aggregate exercise price amount. Margin requirements for index products and some broad-based ETFs may vary.

(*For calculating maintenance margin, use the option's current market value instead of the option proceeds.)

Trading Hours

FLEX options will have the same trading hours as monthly options for that product.