Option Style - Equity Derivatives Provision

2002 ISDA Equity Derivatives Definitions A Jolly Contrarian owner’s manual™ 2.2 in a Nutshell™ The JC’s Nutshell™ summary of this term has moved uptown to the subscription-only ninja tier. For the cost of ½ a weekly 🍺 you can get it here. Sign up at Substack. You can even ask questions! Ask about it here. 2.2 in all its glory Section 2.2. Option Style. 2.2(a) American Option. “American Option” means an Option Transaction, other than a Bermuda Option, pursuant to which the right or rights granted are exercisable on any Scheduled Trading Day during an Exercise Period that consists of more than one Scheduled Trading Day. 2.2(b) Bermuda Option. “Bermuda Option” means an Option Transaction pursuant to which the right or rights granted are exercisable only on the Potential Exercise Dates during the Exercise Period and on the Expiration Date. 2.2(c) European Option. “European Option” means an Option Transaction pursuant to which the right or rights granted are exercisable only on the Expiration Date. edit Resources and Navigation Resources About the Equity Derivatives Definitions | (full wikitext) | (nutshell wikitext) | Equity v credit derivatives showdown Hot topics Synthetic Prime Brokerage Anatomy | The Triple Cocktail | Cancellation and Payment | Calculation Agent Resources About the Equity Derivatives Definitions | (full wikitext) | (nutshell wikitext) | Equity v credit derivatives showdown Hot topics Synthetic Prime Brokerage Anatomy | The Triple Cocktail | Cancellation and Payment | Calculation Agent TOC | 1 General Definitions | 2 Option Transactions | 3 Exercise of Options | 4 Forward Transactions | 5 Equity Swap Transactions | 6 Valuation | 7 Settlement | 8 Cash Settlement | 9 Physical Settlement | 10 Dividends | 11 Adjustments and Modifications | 12 Extraordinary Events · 12.8 Cancellation Amount · 12.9 Additional Disruption Events · 12.9 List of ADEs · 12.9(b) Consequences of ADEs | 13 Miscellaneous Index: Click ᐅ to expand: Equity Derivatives - Premium Synthetic Prime Brokerage Premium version of this page

Overview

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Here we find ISDA’s crack drafting squad™ in “reciting the lore of the market” mode.

Summary

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The 2002 ISDA Equity Derivatives Definitions contemplate three kinds of options:

• European Option: you can only exercise on the Exercise Date, usually the expiry date of the Transaction.
• American Option: you can exercise on any date during an Exercise Period — so you need also to specify a Commencement Date.
• Bermuda Option: you can exercise on specified Potential Exercise Dates only during an Exercise Period, so while it sort of might help to have a Commencement Date, you don’t strictly need one. Disappointingly, Bermuda Options don’t disappear without warning when on a routine training mission over Fort Lauderd ... Hang on a minute maybe that’s OH MY GOD

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See also

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• Bermuda Option Triangle
• American options
• European options
• Flight 19