Options Licensing Course (OLC)

Topics covered in this chapter are:

• Long Call

• Married Put

• Covered Call (also known as Covered Write)

• Put Writing

• Benchmark Indexes for Income-Producing Option Strategies

• A Brief Review of Spreads, Straddles and Combinations

• Bull Call Spread

• Bull Put Spread

Topics covered in this chapter are:

• Long Put

• Protected Short Sale

• Covered Put Sale

• Call Writing

• Bear Put Spread

• Bear Call Spread

Topics covered in this chapter are:

• An Introduction to Volatility

• Importance of Volatility to Options Trading

• Short Volatility Strategies

• Long Volatility Strategies

Topics covered in this chapter are:

• Options Regulation

• Individual Registration Categories

• Registrant Code of Ethics

• Registrant Standards of Conduct

• Trading and Sales Practices

• Regulations Covering Registrants Employed by IIROC Member Firms or Approved Participants of the Bourse

Topics covered in this chapter are:

• Completion and Approval of Option Account Application Forms

• Significant Items of Information on the Option Account Application Form

• Unanswered Questions on the Option Account Application Form

• Responsibility for Final Acceptance of an Option Account

• Completion of the Options Trading Agreement Prior to Option Transactions

• Risk Disclosure Statement

• Applying a Suitability Concept to Option Recommendations

• Managed Accounts and Simple Discretionary Accounts

• Transfer of Option Accounts from One Member Firm to Another

• Commissions

Topics covered in this chapter are:

• Basic Margin Terms

• Factors Affecting the Amount of Margin Required

• IIROC and Bourse de Montréal Minimum Margin Requirements for Equity and index Option Strategies

• Meeting Margin Calls

• Capital Requirements for Firm and Market Maker Accounts

• Member Firm Clearing Deposit Requirements for positions at the Clearing Corporation

Topics covered in this chapter are:

• Essential Information Required for All Types of Orders

• Order Ticket Information Unique to Options

• A Generic Order Entry Screen

• Types of Buy and Sell Orders

• Types of Contingent Orders

• Implied Orders and the Bourse De Montréal’s Implied Pricing Algorithm

• The Bourse de Montréal’s User-Defined Strategies (UDS) Functionality

Topics covered in this chapter are:

• Professional versus Non-Professional Option Traders

• Federal Tax Consequences for Non-Professional Traders

• Federal Tax Consequences for Professional Traders

• Tax Consequences for LEAPS® Investors

• Allowable Use of Exchange-Traded Options in RRSPs, RRIFs and RESPs

Topics covered in this chapter are:

• Opening Corporate Option Accounts

• Opening Option Accounts for Acceptable Institutions

• Know Your Client Rule

• Permissible Option Transactions for Pension Plans, Insurance Companies and Trust Companies in Canada

• Canadian Mutual Funds

Topics covered in this chapter are:

• What is a Clearing Corporation?

• Canadian Derivatives Clearing Corporation

• Options Clearing Corporation

• Functions of a Clearing Corporation

Topics covered in this chapter are:

• What is an Options Exchange?

• Providing a Trading Forum

• Adding and Deleting Option Classes

• Adding and Deleting Option Series

• Expiration Cycles on the Bourse

• Setting Reporting Levels, Position Limits and Exercise Limits

• Setting Capital and Margin Rules

• Developing and Administrating Rules Governing the Marketplace and Approved Participants Dealing in Options

Topics covered in this chapter are:

• The Bourse de Montréal Inc.

• The U.S. Exchanges

Topics covered in this chapter are:

• Obligations of Market Makers

• How Market Makers Reduce or Eliminate Their Exposure

Topics covered in this chapter are:

• Adjustments for Stock Splits

• Adjustments for Stock Dividends

• Cash Dividends

• Impact of Dividends on Option Premiums

• Rights Issues

Topics covered in this chapter are:

• Unique Characteristics and Risks of Index Options

• Key Index Option Contracts

Topics covered in this chapter are:

• Exchange Rate Quoting Convention

• Selecting the Right Option

• Unique Characteristics and Risks of North American Listed Currency Options