Options on BDRs | B3
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BDRs

Options on BDRs

  • Options on BDRs contracts are derivative instruments created to mitigate risks of price fluctuations, in order to offer a mechanism to protect the market from possible losses, to create speculative strategies in relation to the price movement and the raise of exposure and potential return to na investor once the initial invested ammount is relatively small.

  • UnderlyingSponsored BDRs, Unsponsored BDRs
    Option styleEuropean or American.
    Contract sizeVolume of the option’s Underlying.
    QuotationOption premium, in Brazilian Reals, per unit or lot of the Underlying, depending on the quotation type, to two decimal places.
    Tick sizeBRL0.01.
    Last trading dayShall be the day of the expiration date.
    Expiration dateThird Friday of the expiration month. If there is no trading session on the date, the expiration shall occur on the immediately preceding day on which there is a trading session.
    Contract monthsAll months.
    Option exerciseI. Manual Exercise
    The option is exercised manually when the holder notifies the writer that he intends to use his right to buy the underlying asset at the strike price.
    The option may be exercised even if the price of the underlying asset is less than the strike price, but in this case B3’s permission is required.

    II. Automatic Exercise
    On expiration date, option exercise will be performed automatically by B3 if:
    Call Option:
    a) the difference between the underlying asset’s reference price on the cash market and the option’s strike price is positive (option in the money); and
    b) the holder hasn’t blocked automatic exercise for his call option by request to B3 (Contrary Exercise).
    Put Option:
    a) the difference between the option’s strike price and the underlying asset’s reference price on the cash market is positive (option in the money); and
    b) the holder hasn’t blocked automatic exercise for his put option by request to B3 (Contrary Exercise).

    In-the-money options with automatic exercise blocked by the holder and writers’ option positions that are not exercised will be automatically extinguished.
    Settlement of the exercised position is performed by the option holder’s sale and the writer’s purchase of the underlying asset at the strike price.
    • Possibility of strategies, diversification of investments and arbitrage.
    • Possibility of protecting investments in shares.
    • Possibility of investing in stocks using less capital.