Variable Degree of Risk. Transactions in options carry a high degree of risk. Purchasers and sellers of options should familiarize themselves with the type of option (i.e., put or call) which they contemplate trading and the associated risks. You should calculate the extent to which the value of the options must increase for your position to become profitable, taking into account the premium and all transaction costs. The purchaser of options may offset or exercise the options or allow the option to expire. The exercise of an option results either in a cash settlement or in the purchaser acquiring or delivering the underlying interest. If the option is on a future, the purchaser will acquire a futures position with associated liabilities for margin (see the section on Futures above). If the purchased option is out-of- the-money when it expires, you will suffer a total loss of your investment, which will consist of the option premium plus transaction costs. If you are contemplating purchasing out-of-the- money options, you should be aware that the chance of such options becoming profitable ordinarily is remote. Selling ("writing" or "granting") an option generally entails considerably greater risk than purchasing options. Although the premium received by the seller is fixed, the seller may sustain a loss well in excess of that amount. The seller will be liable for additional margin to maintain the position if the market moves unfavourably. The seller will also be exposed to the risk of the purchaser exercising the option and the seller will be obligated to either settle the option in cash or to acquire or deliverthe underlying interest. If the option is on a future, the seller will acquire a position in a future with associated liabilities for margin (see the section on Futures above). If the option is "covered" by the seller holding a corresponding position in the underlying asset, in a future or in another option, the risk may be reduced. In case the option is not covered, the risk of loss can be unlimited. Certain exchanges in some jurisdictions permit deferred payment of the option premium, exposing the purchaser to liability for margin payments not exceeding the amount of the premium. The purchaser is still subject to the risk of losing the premium and transaction costs. When the option is exercised or expires, the purchaser is responsible for any unpaid premium outstanding at that time.
Variable Degree of Risk. 4.1 Transactions in options carry a high degree of risk. Purchasers and sellers of options should familiarise themselves with the type of option (i.e. put or call) which they contemplate trading and the associated risks. ⚫ Some options may be exercised on an expiry day (European- Style Exercise) and other options may be exercised at any time before expiration (American-Style Exercise). Upon exercise, some options require delivery and receipt of the underlying securities, and that other options require a cash payment. ⚫ An option is a wasting asset and there is a possibility that as an option holder you may suffer the loss of the total premium paid for the option. As an option holder, in order to realize a profit it will be necessary to either exercise the option or close the long position in the market. Under some circumstances, it may be difficult to trade the option due to lack of liquidity in the market. You acknowledge that Galaxy International Securities and/or Galaxy International Futures has no obligation either to exercise a valuable option in the absence of your instruction, or to give you prior notice of the expiration date of the option. ⚫ As a writer of an option, you may be required to pay additional margin at any time. You acknowledge that as an option writer, unlike an option holder, you may be liable for unlimited losses based on the rise or fall of the price of the underlying securities and you gain are limited to the option premium. ⚫ Additionally, writers of American-Style Call (Put) options may be required at any time before expiry to deliver (or pay for) the underlying securities to the full value of the strike price multiplied by the number of underlying securities. You recognise that this obligation may be wholly disproportionate to the value of premium received at the time the options were written and may be required at short notice. You should calculate the extent to which the value of the options must increase for your position to become profitable, taking into account the premium and all transaction costs.
4.2 The purchaser of options may offset or exercise the options or allow the options to expire. The exercise of an option results either in a cash settlement or in the purchaser acquiring or delivering the underlying interest. If the option is on a futures contract, the purchaser will acquire a futures position with associated liabilities for margin (see the section on Futures above). If the purchased options expire worthless, ...
Variable Degree of Risk. 3.2.1.1 Transactions in options carry a high degree of risk. Purchasers and sellers of options should familiarize themselves with the type of option (i.e. put or call) which they contemplate trading and the associated risks. You should calculate the extent to which the value of the options must increase for your position to become profitable, taking into account the premium and all transaction costs.
3.2.1.2 The purchaser of options may offset or exercise the options or allow the options to expire. The exercise of an option results either in a cash settlement or in the purchaser acquiring or delivering the underlying interest. If the option is on a futures contract, the purchaser will acquire a futures position with associated liabilities for margin. If the purchased options expire worthless, you will suffer a total loss of your investment which will consist of the option premium plus transaction costs. If you are contemplating purchasing deep-out-of-the-money options, you should be aware that the chance of such options becoming profitable ordinarily is remote.
Variable Degree of Risk. Transactions in options carry a high degree of risk. Purchasers and sellers of options should familiarize themselves with the type of option (i.e. put or call) which they contemplate trading and the associated risks. You should calculate the extent to which the value of the options must increase for your position to become profitable, taking into account the premium and all transaction costs. The purchaser of options may offset or exercise the options or allow the options to expire. The exercise of an option results either in a cash settlement or in the purchaser acquiring or delivering the underlying interest. If the purchased options expire worthless, you will suffer a total loss of your investment which will consist of the option premium plus transaction costs. If you are contemplating purchasing deep-out-of-the-money options, you should be aware that the chance of such options becoming profitable ordinarily is remote. Certain exchanges in some jurisdictions permit deferred payment of the option premium, exposing the purchaser to liability for margin payments not exceeding the amount of the premium. The purchaser is still subject to the risk of losing the premium and transaction costs. When the option is exercised or expires, the purchaser is responsible for any unpaid premium outstanding at that time.
Variable Degree of Risk. 28.3.1. Transactions in options carry a high degree of risk.
28.3.2. Purchasers and sellers of options should familiarize themselves with the type of option (i.e., put or call) they contemplate trading and the associated risks.
28.3.3. You should calculate the extent to which the value of the options must increase for your position to become profitable, taking into account the premium and all transaction costs.
28.3.4. The purchaser of options may offset or exercise the options or allow the option to expire.
28.3.5. The exercise of an option results either in a cash settlement or in the purchaser acquiring or delivering the underlying interest.
28.3.6. If the option is on a future, the purchaser will acquire a futures position with associated liabilities for margin.
28.3.7. If the purchased option is out-of-the-money when it expires, you will suffer a total loss of your investment, which will consist of the option premium plus transaction costs.
28.3.8. If you are contemplating purchasing out-of-the-money options, you should be aware that the chance of such options becoming profitable ordinarily is remote.
28.3.9. Selling ("writing" or "granting") an option generally entails considerably greater risk than purchasing options.
28.3.10. Although the premium received by the seller is fixed, the seller may sustain a loss well in excess of that amount.
28.3.11. The seller will be liable for additional margin to maintain the position if the market moves unfavorably.
28.3.12. The seller will also be exposed to the risk of the purchaser exercising the option, and the seller will be obligated to either settle the option in cash or to acquire or deliver the underlying interest.
27.3.13. If the option is on a future, the seller will acquire a position in a future with associated liabilities for margin.
28.3.14. If the option is "covered" by the seller holding a corresponding position in the underlying asset, in a future or in another option, the risk may be reduced.
28.3.15. In case the option is not covered, the risk of loss can be unlimited.
28.3.16. Certain exchanges in some jurisdictions permit deferred payment of the option premium, exposing the purchaser to liability for margin payments not exceeding the amount of the premium.
28.3.17. The purchaser is still subject to the risk of losing the premium and transaction costs.
28.3.18. When the option is exercised or expires, the purchaser is responsible for any unpaid premium outstanding at that time. RISKS COMMON T...
