Currently we have exchange traded equity (stock) options available on our BOOST trading platform. We offer both Long (Buy) Options and Short (Sell) Options in the US and Hong Kong markets. They are listed and traded on official stock exchanges and have standardised expiry dates, strike prices and deliverables, and settlement is by a central clearing house. The options can be:
American Options – can also be exercised at any time between the date of purchase and the expiration date
European Options – can only be exercised on the option’s expiration date
Call Option – the Right (but not the obligation) to Buy the underlying asset
Put Option – the Right (but not the obligation) to Sell the underlying asset
Options are categorised as Listed Specified Investment Products (SIPs). The Monetary Authority of Singapore (MAS) requires us to assess your investment knowledge and experience through Customer Account Review (CAR) before you are enabled access to this product.
You may email your request to [email protected]. The team will send you a Risk Warning which highlights some of the risks associated with trading short equity options. You must acknowledge your understanding and acceptance of the associated risks via email reply.
Yes, short options are leveraged products and are traded on margin basis. You will need to have sufficient funds in your trading account in order to initiate and maintain your short options trades and positions.
The margins required for initiating and maintaining short options are automatically calculated by the trading platform. These margins make use of percentages to track the underlying stock price on a real-time basis and change accordingly. The formulas to calculate the margins for short call and short put options are:
For Call: (X% * Underlying Spot – Out-of-the-Money Amount) or (Y% * Underlying Spot), whichever is greater.
For Put: (X% * Underlying Spot – Out-of-the-Money Amount) or (Y% * Strike Price), whichever is greater.
In the BOOST trading platform under Product Overview, select on the ‘Info’ (ⓘ) icon for details. Alternatively, right-click on the instrument within Watchlist or Screener and select Trading Conditions in the options menu for details.
For Out-of-The-Money (OTM) option, it will expire worthless. For In-The-Money (ITM) option, five hours prior to expiry, the system will send an alert to inform you. Two hours before expiry, the system will start to reserve cash incrementally to ensure your account has 100% of the cash required to acquire the underlying stock and fulfill your short option obligation. Cash reserved will be shown as margin requirements and may result in Margin Utilization (MU) spikes.
If your account does not have enough cash and the Margin Utilization reached 100%, only expiring options positions will be closed out. However, do note that existing margin call and auto stop-out mechanisms due to losses attributed by open positions will continue to apply and govern the trading account.
For a short call option: Yes. For a short call option, at expiry, the system will buy the underlying stock from the market on your behalf and deliver to the option holder at strike price. If the option is exercised before expiry and your account does not have enough cash, the system will still proceed to buy the stock in the market and deliver to the option holder at strike price. Your account will be in deficit and a short position will be booked. Subsequently, the system will buy back the stock from market to square off the short position. Your account will also be charged the applicable interest and commission.
For a short put option: Yes. For a short put option, at expiry, the system will buy the underlying stock from the market and assign to you at strike price. If the option is exercised before expiry and your account does not have enough cash, the system will still proceed to buy the stock in the market and assign to you at strike price. Your account will be in deficit and a long position will be booked. You will need to put in additional fund before the start of the next trading day, otherwise the system will sell the assigned stock to cover the deficit. Your account will also be charged the applicable interest and commission.
For a covered call: Yes. For a covered call, at expiry or exercised before expiry, the system will deliver the underlying stock to the option holder at the strike price and book the position accordingly in your account.
The options trading screen is located in the Product Overview and Charts window under Option Chain. You can select the stock on your Watchlist or by searching for the stock using the instrument search bar and the options for the stock will appear. The preset options strategies can be accessed by clicking on STRATEGIES. Please note that not all stocks have options available for trading.