Janice, in re your lockup question, here's the ugly answer. If that day ever comes, option buyers will be screaming bloody murder, and the writers will be laughing all the way to the bank. The short answer is bolded at the bottom.
5. The courts, the SEC, another regulatory agency, OCC or the options markets may impose exercise restrictions. While an American-style option can normally be exercised at any time prior to its expiration, OCC and the options markets have authority to restrict the exercise of options at certain times in specified circumstances. The options markets often exercise such authority with respect to an option in which trading has been halted. If a restriction on exercise is imposed at a time when trading in the option has also been halted, holders of that option will be locked into their positions until either the exercise restriction or the trading halt has been lifted.
Exercise restrictions imposed by OCC and the options markets affecting cash-settled options generally cannot be continued in effect beyond the opening of business on the last trading day before their expiration. Such exercise restrictions affecting physical delivery options generally cannot be continued beyond the opening of business on the tenth business day before their expiration, but with one important exception. If OCC determines that the available supply of a security underlying a physical delivery option appears to be insufficient to permit delivery of the security by the writers of all outstanding calls in the event of exercise, or that foreign government restrictions would prevent or unduly burden the orderly settlement of exercises of foreign currency options, OCC may indefinitely prohibit the exercise of puts by holders who would be unable to deliver the underlying security. The holder of such a put could lose his entire investment in the option if the prohibition remained in effect until the put's expiration and the holder was unable either to acquire the underlying interest or to sell his put in the market. The put holder might be unable to do either because the very event that caused OCC to impose the exercise prohibition-e.g., a suspension of trading in an underlying stock-might not only make it difficult or impossible to obtain the underlying interest, but might also impair the market in options on that interest.
It is also possible that a court, the SEC or another regulatory agency having jurisdiction would impose a restriction which would have the effect of restricting the exercise of an option. In such a case the option would not be exercisable until the restriction was terminated. In the remote possibility that the restriction were to remain in effect until the expiration of the option -which has never yet occurred- the option would expire worthless, and the holder would lose the entire amount that he paid for the option.
cboe.com
Perhaps it's not so remote after all. |
