Option Style - Equity Derivatives Provision

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2002 ISDA Equity Derivatives Definitions
A Jolly Contrarian owner’s manual

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Resources About the Equity Derivatives Definitions | (full wikitext) | (nutshell wikitext)
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

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Section 2.2 in a Nutshell
Use at your own risk, campers!

2.2. Option Style.

2.2(a)American Option” means an Option Transaction which is not a Bermuda Option and which may be exercised on any Scheduled Trading Day during a multi-day Exercise Period.
2.2(b)Bermuda Option” means an Option Transaction which may be exercised only on the Potential Exercise Dates during the Exercise Period and on the Expiration Date.
2.2(c)European Option” means an Option Transaction which may be exercised only on the Expiration Date.

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Full text of Section 2.2

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.

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Content and comparisons

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

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

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See also

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References