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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (43808)	1/18/1999 1:45:00 PM
From: Tommaso	Read Replies (1) \| Respond to of 132070

I am trying to consider what I may not have taken into account, since unimagined outcomes have been disasters for me in the past. What is the risk that in a severe market collapse, creditors on put contracts would declare bankruptcy and be unable to honor the contract? Here's what the CBOE says, which sounds good. But AAA-rate enterprises have suddenly been proved unsound: The Options Clearing Corporation is the sole issuer of all securities options listed at the CBOE, four other U.S. stock exchanges and the National Association of Securities Dealers, Inc. (NASD), and is the entity through which all CBOE option transactions are ultimately cleared. As the issuer of all options, OCC essentially takes the opposite side of every option traded. Because OCC basically becomes the buyer for every seller and the seller for every buyer, it allows options traders to buy and sell in a secondary market without having to find the original opposite party. The OCC substantially reduces the credit risk aspect of trading securities options as the OCC requires that every buyer and every seller have a clearing member and that both sides of the transaction are matched. It also has the authority to make margin calls on firms during the trading day. The OCC has a AAA credit rating from Standard & Poor's Corporation.