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Strategies & Market Trends : DJX (Dow Jones Ind. Avg. options)
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To: giddy guru who wrote (5)10/4/1997 7:00:00 PM
From: FR1   of 33
 
gg:
>DJX options are European style. They can be exercised only on expiration. >

I assume by this that you mean calculated for cash. You can, of course, buy and sell anytime, right?

I called Fidelity options trader and he pointed out the following:

1) There is, of course, no underlying single security to the DJX so you can never take ownership.

2) You can buy DJX puts and calls anytime and sell them anytime.

3) What actually happens is that you are buying and selling the premium.

4) On expiration date, anyone left holding "in-the-money" DJX options has them settled in cash by the exchange.

5) In summary, you are never forced to hold a put or call until expiration date.

I assume when you used the word "exercised" you mean calculated for cash as opposed to selling premiums, right?
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