Common use of Writing Options Clause in Contracts

Writing Options. If the Investment Guidelines allow MSIM to write an option for the Investment Manager, the risk involved is considerably greater than buying options. The Investment Manager may be liable for margin to maintain its position and a loss may be sustained well in excess of any premium received. By allowing MSIM to write an option on the Investment Manager’s behalf, the Investment Manager accepts a legal obligation to purchase or sell the underlying asset if the option is exercised against the Investment Manager, however far the market price has moved away from the exercise price. If the Investment Manager already owns the underlying asset which MSIM has contracted on the Investment Manager’s behalf to sell as part of the Fund (known as “covered call options”) the risk is reduced. If the Investment Manager does not own the underlying asset (known as “uncovered call options”) the risk can be unlimited. Only experienced persons should contemplate authorising MSIM to write uncovered options, and then only after securing full details of the applicable conditions and potential risk exposure.

Writing Options. If the Investment Guidelines allow MSIM to write an option for the Investment Manager, the risk involved is considerably greater than buying options. The Investment Manager may be liable for margin to maintain its position and a loss may be sustained well in excess of any premium received. By allowing MSIM to write an option on the Investment Manager’s 's behalf, the Investment Manager accepts a legal obligation to purchase or sell the underlying asset if the option is exercised against the Investment Manager, however far the market price has moved away from the exercise price. If the Investment Manager already owns the underlying asset which MSIM has contracted on the Investment Manager’s 's behalf to sell as part of the Fund (known as “"covered call options”") the risk is reduced. If the Investment Manager does not own the underlying asset (known as “"uncovered call options”") the risk can be unlimited. Only experienced persons should contemplate authorising MSIM to write uncovered options, and then only after securing full details of the applicable conditions and potential risk exposure.

Writing Options. If the Investment Guidelines allow MSIM to write an option for the Investment ManagerAdviser, the risk involved is considerably greater than buying options. The Investment Manager Adviser may be liable for margin to maintain its position and a loss may be sustained well in excess of any premium received. By allowing MSIM to write an option on the Investment ManagerAdviser’s behalf, the Investment Manager Adviser accepts a legal obligation to purchase or sell the underlying asset if the option is exercised against the Investment ManagerAdviser, however far the market price has moved away from the exercise price. If the Investment Manager Adviser already owns the underlying asset which MSIM has contracted on the Investment ManagerAdviser’s behalf to sell as part of the a Fund (known as “covered call options”) the risk is reduced. If the Investment Manager Adviser does not own the underlying asset (known as “uncovered call options”) the risk can be unlimited. Only experienced persons should contemplate authorising MSIM to write uncovered options, and then only after securing full details of the applicable conditions and potential risk exposure.

Writing Options. If the Investment Guidelines allow MSIM to write an option for the Investment ManagerAdviser, the risk involved is considerably greater than buying options. The Investment Manager Adviser may be liable for margin to maintain its position and a loss may be sustained well in excess of any premium received. By allowing MSIM to write an option on the Investment ManagerAdviser’s behalf, the Investment Manager Adviser accepts a legal obligation to purchase or sell the underlying asset if the option is exercised against the Investment ManagerAdviser, however far the market price has moved away from the exercise price. If the Investment Manager Adviser already owns the underlying asset which MSIM has contracted on the Investment ManagerAdviser’s behalf to sell as part of the Fund (known as “covered call options”) the risk is reduced. If the Investment Manager Adviser does not own the underlying asset (known as “uncovered call options”) the risk can be unlimited. Only experienced persons should contemplate authorising MSIM to write uncovered options, and then only after securing full details of the applicable conditions and potential risk exposure.