Common use of Variable Degree of Risk Clause in Contracts

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. Warning to option holders ⚫ 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. Warning to option writers ⚫ 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.

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. Warning to option holders ⚫  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. Warning to option writers ⚫  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.