A listed option is a forward transaction traded at a forward exchange which is binding on one party. It has a standardized issue structure. The standardized contract elements are entered in the Class master data. Unlike with futures, the risk is not evenly distributed here. The purchaser (owner of long position) of an option has the right to exercise. This right must be paid for: The purchaser must pay the seller the premium option. The vendor ( writer, owner of the short position) must fulfill the conditions of the transaction if the purchaser exercises it.

The differing risk for long and short influences the collateral provisions that the counterparties have to make.

There are two methods:

• Normal style

• Future style

Via Master data ® Class data ® Listed options, you can create, display and change the following options:

1. Stock option

The purchaser of a stock option has the right to receive a fixed number of stocks of a class at a fixed price or to sell them (Call option). If a purchaser exercises an option, then the clearing house of the forward exchange randomly assigns a vendor to the purchaser. The assigned vendor is then exercised by the clearing house. Part exercise of positions is possible.

2. Option - Stock indexes

A purchaser of a stock index option has the right to buy (call option) or sell (put option) a block of stock corresponding to the index at a fixed price. As the processing of the security transaction would not be possible when it is exercised, the exercise basically takes place via cash settlement.

3. Option - Security future (Bond)

By purchasing a futures option, you have the right to purchase a futures contract (call option) or sell one (put option). When exercising the option, the purchaser of a put option has a short position, that of a call option a long position.

With these options, the premium is not paid upon purchase. The settlement takes place as with futures.

4. Option - Index future

Note: You specify the option category when defining the product type in Customizing.

You create the class data for options here.

There are four basic positions:

• Long Call = right to purchase the underlying from the owner at the base price agreed in advance.. The investor hopes for increasing prices. He will exercise the option as soon as the market price exceeds the base price as he can then purchase at below the market price.
• Short Call = obligation to deliver the underlying to the owner of the long call position at the price agreed in advance. The investor hopes for prices that remain the same or fall slightly so that the option becomes worthless. The option is not exercised. The investor can collect the premium option as a yield improvement of his portfolio in the case of a covered call.
• Long put = right to deliver the underlying to the owner of the short put position at the price agreed in advance. The investor hopes for falling prices. He will exercise the option as soon as the market price falls below the base price as he can then sell at above the market price.
• Short Put = obligation to take the underlying from the owner of the long put position and to pay the base price agreed in advance. The investor hopes for prices that remain the same or increase slightly so that the option expires worthless and he receives the option premium.

You specify whether a put or call is involved in the contract details.

To create a listed option, you must fill in the following fields:

• Exchange (issuer, calendar)
• Dates ( last trading day, expiration date, settlement date)
• Tick (Tick amount, tick value)
• Contract details (Put/call, number of units, strike amount, securities index, etc.)

Header data such as option category, settlement, etc. is based on Customizing settings.