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Unformatted text preview: ns s s s s They become vested after a period of time (usually 1 to 4 They years) years) They cannot be sold They often last for as long as 10 or 15 years Accounting standards now require the expensing of Accounting executive stock options executive Chance/Brooks An Introduction to Derivatives and Risk Man Ch. 2: 17 Transaction Costs in Option Trading s s s s Floor Trading and Clearing Fees Commissions Bid-Ask Spread Other Transaction Costs Chance/Brooks An Introduction to Derivatives and Risk Man Ch. 2: 18 The Regulation of Options Markets x x x x Federal regulation Industry regulation Over-the-counter market regulation The issue of which agency has regulatory responsibility The has occasionally arisen. has Chance/Brooks An Introduction to Derivatives and Risk Man Ch. 2: 19 Appendix 2.A: Margin Requirements s s s s s Definitions x Margin x Initial margin x Maintenance margin Margin Requirements on Stock Transactions Margin Requirements on Option Purchases Margin Requirements on the Uncovered Sale of Options Margin Requirements on Covered Calls Chance/Brooks An Introduction to Derivatives and Risk Man Ch. 2: 20 Appendix 2.B: Taxation of Option Transactions s s s s s s Taxation of Long Call Transactions Taxation of Short Call Transactions Taxation of Long Put Transactions Taxation of Short Put Transactions Taxation of Non-Equity Options Wash and Constructive Sales Chance/Brooks An Introduction to Derivatives and Risk Man Ch. 2: 21 (Return to text slide) Chance/Brooks An Introduction to Derivatives and Risk Man Ch. 2: 22 (Return to text slide) Chance/Brooks An Introduction to Derivatives and Risk Man Ch. 2: 23 (Return to text slide) Chance/Brooks An Introduction to Derivatives and Risk Man Ch. 2: 24...
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This document was uploaded on 02/19/2014 for the course MBA finance at University of Texas at Austin.

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