Template:Nutshell Equity Derivatives 3.4: Difference between revisions

Section {{eqderivprov|3.4}}. '''{{eqderivprov|Automatic Exercise}}'''. If “'''{{eqderivprov|Automatic Exercise}}'''” is specified to be applicable to an {{eqderivprov|Option Transaction}}, then each {{eqderivprov|Option}} not previously exercised under that {{eqderivprov|Option Transaction}} will be deemed to be automatically exercised: <br>

:{{eqderivprov|3.4(a)}} where “'''{{eqderivprov|Cash Settlement}}'''” is applicable, at the {{eqderivprov|Expiration Time}} on the {{eqderivprov|Expiration Date}} unless {{eqderivprov|Buyer}} notifies {{eqderivprov|Seller}} or, if applicable, {{eqderivprov|Seller’s Agent}} (by telephone or in writing) prior to the {{eqderivprov|Expiration Time}} on the {{eqderivprov|Expiration Date}} that it does not wish Automatic Exercise to occur, in which case Automatic Exercise will not apply; and <br>

:{{eqderivprov|3.4(b)}} where “'''{{eqderivprov|Physical Settlement}}'''” is applicable, at the {{eqderivprov|Expiration Time}} on the {{eqderivprov|Expiration Date}} if at such time the {{eqderivprov|Option}} is In-the-Money, as determined by the {{eqderivprov|Calculation Agent}}, unless {{eqderivprov|Buyer}} notifies {{eqderivprov|Seller}} or, if applicable, {{eqderivprov|Seller’s Agent}} (by telephone or in writing) prior to the {{eqderivprov|Expiration Time}} on the {{eqderivprov|Expiration Date}} that it does not wish {{eqderivprov|Automatic Exercise}} to occur, in which case {{eqderivprov|Automatic Exercise}} will not apply.

:{{eqderivprov|3.4(c)}} “'''{{eqderivprov|In-the-Money}}'''” means  

::(i) in respect of a {{eqderivprov|Call}}, that (A) the Reference Price is equal to or greater than the price for a Share at which any {{eqderivprov|Related Exchange}} would automatically exercise a {{eqderivprov|Physically-settled}} option with the {{eqderivprov|Strike Price}} relating to such Share, or (B) if no options relating to such Share are listed on any {{eqderivprov|Related Exchange}} or no {{eqderivprov|Related Exchange}} is specified in the related {{eqderivprov|Confirmation}}, the Reference Price is greater than the {{eqderivprov|Strike Price}}; and  

::(ii) in respect of a {{eqderivprov|Put}}, that (A) the Reference Price is equal to or less than the price for a Share at which any {{eqderivprov|Related Exchange}} would automatically exercise a {{eqderivprov|Physically-settled}} option with the {{eqderivprov|Strike Price}} relating to such Share, or (B) if no options relating to such Share are listed on any {{eqderivprov|Related Exchange}} or no {{eqderivprov|Related Exchange}} is specified in the related {{eqderivprov|Confirmation}}, the Reference Price is less than the {{eqderivprov|Strike Price}}.

:{{eqderivprov|3.4(d)}} “'''{{eqderivprov|Reference Price}}'''” means the price per {{eqderivprov|Share}} or amount per {{eqderivprov|Basket}} determined as provided in the related {{eqderivprov|Confirmation}} as of the {{eqderivprov|Expiration Time}} on the {{eqderivprov|Expiration Date}} or, if no means of determining such price or amount are so provided, in respect of a {{eqderivprov|Share Option Transaction}}, the {{eqderivprov|Relevant Price}} of the Share (for which purpose the {{eqderivprov|Valuation Time}} and the {{eqderivprov|Valuation Date}} will be the {{eqderivprov|Expiration Time}} and the {{eqderivprov|Expiration Date}}, respectively) and, in respect of a {{eqderivprov|Share Basket Option Transaction}}, the sum of the values calculated as of the {{eqderivprov|Expiration Time}} on the {{eqderivprov|Expiration Date}} for the {{eqderivprov|Shares}} of each {{eqderivprov|Issuer}} as the product of the {{eqderivprov|Relevant Price}} of such Share (for which purpose the {{eqderivprov|Valuation Time}} and the {{eqderivprov|Valuation Date}} will be the {{eqderivprov|Expiration Time}} and the {{eqderivprov|Expiration Date}}, respectively) and the relevant {{eqderivprov|Number of Shares}} comprised in the {{eqderivprov|Basket}}. <br>