About Equity and Fixed Income Options
The Option Contract panel allows you to manually add an equity and fixed income option contract. An equity option is a contract giving the holder the right, but not the obligation, to buy (call option) or sell (put option) a stated number of shares of an equity or exchange-traded fund at a fixed price until a stated expiration date.
A fixed income option is almost identical, giving the holder a right to buy or sell the underlying bond. The writer (seller) of an option receives a premium based on the price per contract. The buyer of a call option is betting that the underlying equity or fixed income security's prices will rise above the strike price, allowing them to exercise the option. Conversely, the buyer of a put option is betting that the underlying equity or fixed income security's prices will fall below the strike price, allowing them to exercise the option. In either case, the writer is betting that the option will not be exercised and expire worthless, allowing them to simply keep the option premium as a gain.
The system uses the value in the Processing Security Type field on the Option Contract panel to identify the type of option contract you are adding. To add an equity option, select OPOPEQ (Equity Option) from the Processing Security Type drop down list. To add a fixed income option, select OPOPDB (Debt Option) from the Processing Security Type drop down list. Additionally, the following fields are required to set up a security master record for an equity or fixed income option contract: Issue Name, Primary Asset ID Type, Primary Asset ID, Issue Country Code, Asset Currency, Settlement Currency, Income Currency, Expiration Date, Strike Price, Option Type, Put/Call Flag, Underlying Issue Name, and Underlying Asset ID.
About Swaptions
The Option Contract panel allows you to manually add a swaption. A swaption is an option contract that allows the owner to enter into a pre-defined swap agreement on a future date. The underlying pre-defined swap can be in the form of an interest rate swap or a currency swap. The buyer of a swaption has the right to exercise into the receiving or paying leg of a swap on a future date. The writer or seller of a swaption is taking on the obligation of the receiving or paying leg of the swap if the buyer exercises the swaption. The option is on the fixed rate side of the swap, where the buyer of the option would have the right to receive or pay a fixed rate versus receiving or paying a floating rate. Most of the processing and accounting requirements are similar to that of other option contracts.
The system uses the value in the Processing Security Type field on the Option Contract panel to identify the type of option contract you are adding. To add a swaption, select OPOPSW (Swaptions) from the Processing Security Type drop down list. Additionally, the following fields are required to set up a security master record for a swaption: Issue Name, Primary Asset ID Type, Primary Asset ID, Issue Country Code, Asset Currency, Settlement Currency, Income Currency, Expiration Date, and Option Type.
About Future Options
The Option Contract panel allows you to manually add an option on a future. An option on a future is a contract giving the holder the right, but not the obligation, to buy (call option) or sell (put option) a stated number of future contracts at a fixed price until a stated expiration date. Some options on futures have a variation margin component. Similar to a future, it is the daily cash settlement of gain/loss based on price fluctuations. However, this variation margin is calculated based on the price of the option, not the future.
The system uses the value in the Processing Security Type field on the Option Contract panel to identify the type of option contract you are adding. To add a future option, select OPOPCM (Future Option) from the Processing Security Type drop down list. Additionally, the following fields are required to set up a security master record for a future option: Issue Name, Primary Asset ID Type, Primary Asset ID, Issue Country Code, Asset Currency, Settlement Currency, Income Currency, Expiration Date, Strike Price, Option Type, Premium Type, and Put/Call Flag.
Add Option Contracts
To manually add an option contract:
In Accounting Center, in the left navigation pane, click Setup > Securities > Manage Securities > Issue Viewer.
You see the Issue Viewer tool.
Click the Add arrow.
Point to Derivatives and click Option Contract.
You see the Option Contract panel.Complete the options on the Option Contract panel.
Click Submit.
Change Option Contracts
Some fields are locked when there is an existing position on the security. This is because a change would impact the existing position. These fields include Asset Currency, Investment Type, Processing Security Type, Quantity Type, Price Multiplier, and Quantity Scale. Other fields are locked so they cannot be changed. See the About Locked Security Master Record Fields section for more information.
If you need to change a security master record, Eagle recommends canceling the security, making changes to the security master record, and rebooking the security.
To manually change an option contract:
In Accounting Center, in the left navigation pane, click Setup > Securities > Manage Securities > Issue Viewer.
You see the Issue Viewer tool.Enter the query parameters and click Search.
You see a list of security records that meet your selection criteria in the Query Result window.Select the security record you want to update, click the Change arrow, and click Change
Option Contract. Or double-click the security record.
You see the Change Option Contract panel.Change the options on the Change Option Contract panel.
Click Submit.
Option Contract Panel Options
The following are the options in the Option Contract panel. Note options may vary according to your selections.
Option | Tag | Description |
|---|---|---|
SRM Status Flag | ||
Release Status | 614 | Displays the release status of the Security Reference Manager (SRM) record. This field is null when adding a new security. |
Authorize Flag | 11742 | Flags records that have been authorized. |
Validation Process Flag | 4569 | Flags records that have been reviewed in the Security Reference Manager (SRM). |
Option Identification | ||
Issue Name | 961 | Specifies the name of the security. |
Issue Description | 962 | Describes the security. |
Ticker | 13 | Specifies the system of letters used to uniquely identify the security. |
Primary Asset ID Type | 1432 | Specifies the primary asset identifier type for the security, such as CUSIP, ISIN, and SEDOL. |
Primary Asset ID | 14 | Specifies the primary asset identifier for the security. |
Alt Asset ID Type | 5501 | Specifies an alternate asset identifier type for the security. |
Alt Asset ID | 1795 | Specifies the alternate asset identifier for the security. |
Option Xreference Identification | ||
CUSIP | 1952 | Specifies the Committee of Uniform Security Identification Procedure (CUSIP), a unique identification number that identifies the security issue. |
ISIN | 1955 | Specifies the International Security Identification (ISIN), a unique international identification number that identifies the security issue. |
Sedol | 1958 | Specifies the Stock Exchange Daily Official List (SEDOL) number, a unique identification number that identifies the security issue. |
Reuters | 1961 | Specifies the Reuters identification number that identifies the security issue. |
Bloomberg ID | 1964 | Specifies the Bloomberg identification number that identifies the security issue. |
SICOVM | 1967 | Specifies the SICOVM identification number that identifies the security issue. |
Valoren | 1970 |
Specifies the Valoren identification number that identifies the security issue.
CEDEL
Specifies the |
Valoren identification number that identifies the security issue. | ||
Cash Matching ID | 1973 | Identifies the security issue for use in cash matching when you use cash segregation. If you set up security cross reference identifiers of CMM for use with cash matching, you can provide a Cash Matching ID for each security you plan to use in cash matching. |
INTERNAL | 1976 | Specifies the internal identification number that identifies the security issue. |
CINS | 1979 | Specifies the CINS identification number that identifies a foreign security issue. The CINS numbering system is an extension of the CUSIP numbering system. |
Xref Exchange | 1981 | Specifies the exchange where the security is traded. |
Option Details | ||
Investment Type | 11 | Specifies the investment type. For example, OP (Option). |
Processing Security Type | 3931 | Specifies the code value that the system uses to determine the type of security you are adding. Options include:
|
Security Type | 82 | Specifies the type of security. |
Sub Security Type | 1464 | Specifies the sub security type. |
Risk Classification Type | 11584 | Specifies the risk classification type for the security. This value allows funds to disclose the primary type of underlying risk within derivatives contracts and hedging activity, such as interest rate risk, credit risk, and so on. The FAS 161 report uses this information. You can select any value defined for the RISK_TYPE code category. |
Granularity Category | 11476 | Specifies the asset's classification for ledger granularity purposes. If the security attributes available for ledger granularity account breakouts (security type, long/short indicator, Federal tax indicator, market sector description, affiliated/unaffiliated, and issue country) do not provide enough detail, you can use a granularity category to classify the asset for ledger reporting. Code values are maintained under the GRANULARITY_CAT code category. |
Cost Basis Rule Type | 2817 | Specifies the cost basis rule type for cost basis reporting. |
Quantity Type | 12 | Specifies the quantity generally accepted as a standard for exchange, such as shares and par. |
Price Multiplier | 18 | Determines the price. You should not change this value once a position exists. |
Contract Size | 19 | Specifies the contract size. |
Country of Risk | 2288 | Specifies the issuer of the security's principal place of business. |
Country of Risk Code | 10536 | Specifies the code of the issuer of the security's principal place of business. |
Issue Country | 2290 | Specifies the name of the country that issued the security. |
Issue Country Code | 1418 | Specifies the code that represents the country that issued the security. |
Asset Currency | 85 | Specifies the currency in which the security is priced. You should not change this value once a position exists. |
Settlement Currency | 63 | Specifies the currency in which the security is settled. |
Income Currency | 1186 | Specifies the currency in which the security pays income. |
Primary Exchange | 2291 | Specifies the marketplace in which the security is traded. |
Primary Exchange Code | 17 | Specifies the code of the marketplace in which the security is traded. It is also used with global tax withholding and tax reclaim processing. |
Region | 5423 | Specifies a region. It does not necessarily mean the location of the exchange in which a security is traded. For example, suppose you have a Canadian bond that trades in the London Stock Exchange. You may want to set the region to Canada or North America. The values for this field are user defined. You can add code values using the |
Codes workspace. | ||
Expiration Date | 38 | Specifies the date the option contract matures. |
Strike Price | 67 | Specifies the price at which the option contract can be exercised. The call option buyer can buy the underlier or a put option buyer can sell the underlier. |
Option Type | 1142 | Indicates whether the option is American, European, or Bermudian. |
Premium Type | 3302 | Specifies how to treat the premium when trading an option on futures. Options include:
This field appears if you set the Processing Security Type field (tag 3931) to a value of OPOPCM (Future Option). |
Variation Margin | 4533 | Determines whether a daily margin is posted on the security. Options include:
This field appears if you set the Premium Type field to a value of Notional Cost. |
Variation Margin Rule | 2289 | Specifies the variation margin rule. The system uses this field to calculate notional cost, market value, unrealized gain/loss, and realized gain/loss for options on futures with variation margin. Options include:
This field appears if you set the Variation Margin field to a value of Yes. |
Underlying Coupon rate | 4349 | Specifies the coupon rate that reflects the current standard of 6.0 for Australian 10 year bonds and Australian 3 year bonds. If the standard changes, you can edit the field value. |
Payment Frequency | 472 | Specifies a payment frequency that reflects the current standard of Semi-Annual for Australian 10 year bonds and Australian 3 year bonds. If the standard changes, you can change the field value. Options include:
This field appears if you set the Variation Margin Rule field (tag 2289) to a value of Australian Government 10 Year Bond Future or Australian Government 3 Year Bond Future. |
Option Flags | ||
Put/Call Flags | 1350 | Indicates whether the security has a call or put option. Options include:
|
Restricted Flag | 1139 | Indicates any trade restrictions on the security. Options include:
|
Create Synthetic Cash Security | 2300 | Indicates whether to seed a synthetic cash security. Options include:
|
Look Thru Value | 1808 | Specifies the underlying security. |
Look Thru Ind | 1776 | Used to view exposure to the underlying security, index, or portfolio. |
Inactive Flag | 11043 | Indicates whether the security is inactive. Options include:
NOTE: If this field is set to Yes, no trades are allowed. |
Underlying Information | ||
Underlying Issuer Name | 1141 | Specifies the name of the underlying security. |
Underlying Ticker | 1349 | Specifies the ticker of the underlying security. |
Underlying Asset ID | 1348 | Specifies the asset identifier of the underlying security. |
Underlying Type | 916 | Specifies the underlying security type. |
Issuer Information | ||
Issuer Name | 2285 | Specifies the name of the company or municipality that offered the security for sale. |
Issuer ID | 1413 | Specifies the identifier of the company or municipality that offered the security for sale. |
Country of Incorporation Code | 1174 | Specifies the ISO country code of the country in which the issuer of the security was incorporated. |
Issuer Industry | 1417 | Specifies the industry of the issuer. |
Legal Entity Identifier (LEI) | 5089 | Displays the Legal Entity Identifier (LEI) that identifies the issuer as a financial party. If an LEI value is present, the Legal Entity Identifier Details section appears. |
Legal Entity Identifier Details | ||
Legal Name | 5090 | Displays the legal name of the issuer as the financial party registered with the LEI. |
Entity Status | 5091 | Displays the status of the issuer. For example, ACTIVE and INACTIVE. |
Legal Form | 5092 | Displays the legal form of the issuer as financial party registered with the LEI. For example, CORPORATION. |
Assigned Date | 5093 | Displays the date when the issuer's LEI was assigned. |
Last Update Date | 5094 | Displays the date when the issuer's LEI information was last updated. |
Disabled Date | 5095 | Displays the date when the issuer's LEI information was disabled. |
Record State | 5096 | Displays the record state for the issuer's LEI. The record state indicates the current process status of the CFTC Interim Compliant Identifier (CICI) record. For example, UNDER_REVIEW, DUPLICATE, CONFLICTING_SOURCES, INADEQUATE_SOURCES, VALIDATED, PENDING_REMOVAL. |
Certification State | 5097 | Displays the certification state used to register the issuer's LEI. For example, CERTIFIED, NOT_CERTIFIED, STALE. |
Street | 5098 | Displays the street address used to register the issuer's LEI. |
City | 5099 | Displays the city used to register the issuer's LEI. |
State | 5100 | Displays the state code used to register the issuer's LEI. |
Zip | 5180 | Displays the ZIP code used to register the issuer's LEI. |
Country Code | 5181 | Displays the country code used to register the issuer's LEI. |