Options on ETF
- Specifications
| Underlying | Exchange Traded Funds (ETF). |
| Option style | European or American. |
| Contract size | Volume of the option’s Underlying. |
| Quotation | Option premium, in Brazilian Reals, per unit or lot of the Underlying, depending on the quotation type, to two decimal places. |
| Tick size | BRL0.01. |
| Last trading day | Shall be the day of the expiration date. |
| Expiration date | Third 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 months | All months. |
| Option exercise | I. 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. |
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