Hong Kong Stock Option Hotline:(852) 3890 0389
Stock Options Specification
Notes on Trading and Exercising Stock Options
1. A client must have either a Cash Securities account or a Margin Securities account before opening a Stock Options Account.
2. Information for Trading:
2.1 Option premium must be paid for purchasing a stock option (e.g. Long Call or Long Put). Margin is not required.
2.2 A client must pay and maintain the required level of margin before selling a stock option (e.g. Short Call or Short Put). The margin requirement is determined by our company with absolute discretion and our company has the right to adjust the margin requirement from time to time.
2.3 Margin is not required if the short call position of a client is hedged by the same quantity of the underlying stock (i.e. a Covered Call).
2.4 Irrespective of the deposit method used, trading should be made after the deposit is confirmed by our company. If the trading instructions given by clients are in conflict with our company’s risk management policy or cause any risk exposure of any extent to our company, our company has the right not to carry out those trading instructions.
2.5 If the required margin is not maintained in the client’s Stock Options Account, our company has the right to close all or any of the client’s position without the client’s consent.
3. Information for exercising and settlement:
3.1 Option trading is settled on cash basis on T+1. When exercising Put options, clients must deliver the required quantity of the underlying stock for settlement on T+2.
3.2 Options on HK stocks are American style, that is, the holder may exercise the option any time before the expiry date of the option.
3.3 To exercise an option (either Long Call or Long Put), the client must place his order before 4 p.m. on a trading day. Late order shall not be accepted, and the client must place his order again before 4 p.m. on the next trading day.
3.4 If a client holds a Call option (i.e. Long Call) or Put option (i.e. Long Put) without giving any instruction to exercise the option before the expiry date, the Derivatives Clearing and Settlement System (“DCASS”) will automatically generate exercise requests in respect of all open long positions in spot months contracts which are in-the-money by or above the percentage (1.5%) prescribed by The SEHK Options Clearing House Limited (“SEOCH’) from time to time. Clients may instruct our company to override such automatically generated exercise requests before 4 p.m. on the expiry day.
3.5 Our company has no responsibility to solicit instruction from the client on the day the option expires whether to exercise the option.
3.6 Clients must either (a) deliver the required quantity of the underlying stock for settlement on T+2 or (b) purchase the required quantity of the underlying stock before 3:15 p.m. on T+1 to satisfy their delivery obligation under the option if the Call option they have sold (i.e. Short Call) is exercised by the buyer. In view of the prevailing market situation, our company has the right, without prior consent from the client, to purchase the required quantity of stock for settlement and the client is responsible for any losses, costs, fees and expenses.
3.7 If a Put option sold by a client (i.e. Short Put) is exercised, the client is obliged to purchase the underlying stock at the exercise price, there must be sufficient funds in the securities account on T+1. In view of prevailing market situation, our company has the right, without prior consent from the client, to sell those stocks to cover any deficit in his/her securities account and the client is responsible for any losses, costs, fees and expenses.
Hong Kong Stock Option Hotline