Manage Option Contracts in Issue Viewer

Owned by Copy Page Tree (Unlicensed)
Last updated: Jul 27, 2023 by Nancy Cohn (Deactivated)
11 min read

In the Option Contract panel, you can manually add and change an option contract.

This article assumes you are familiar with the entity elections that have been made for processing an option contract.

About Option Contracts

An option contract is the right, but not the obligation, to buy (for a call option) or sell (for a put option) a specific amount of a given stock, commodity, currency, index, or debt, at a specified price (the strike price) during a specified period of time. For stock options, the amount is usually 100 shares. Each option contract has a buyer, called the holder, and a seller, known as the writer. If the option contract is exercised, the writer is responsible for fulfilling the terms of the contract by delivering the shares to the appropriate party. In the case of a security that cannot be delivered, the contract is settled in cash. For the holder, the potential loss is limited to the price paid to acquire the option. When an option is not exercised, it expires.

You can add the following types of option contracts using the Option Contract panel:

  • Equity option

  • Fixed income option

  • Swaption

  • Future option

  • Interest rate option collar

  • Currency option

  • Factor based option

  • Index option

For information on interest rate collar, currency, factor based, and index options, contact Instrument Engineering.

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:

  1. In Accounting Center, in the left navigation pane, click Setup > Securities > Manage Securities > Issue Viewer.
    You see the Issue Viewer tool.

  2. Click the Add arrow.

  3. Point to Derivatives and click Option Contract.
    You see the Option Contract panel.

  4. Complete the options on the Option Contract panel.

  5. 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:

  1. In Accounting Center, in the left navigation pane, click Setup > Securities > Manage Securities > Issue Viewer.
    You see the Issue Viewer tool.

  2. Enter the query parameters and click Search.
    You see a list of security records that meet your selection criteria in the Query Result window.

  3. 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.

  4. Change the options on the Change Option Contract panel.

  5. 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

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.

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:

  • OPIRCO. Interest Rate Option Collars

  • OPOPCM. Future Option

  • OPOPCR. Currency Option

  • OPOPDB. Debt Option

  • OPOPEQ. Equity Option

  • OPOPFB. Factor Based Option

  • OPOPIX. Index Option

  • OPOPSW. Swap Option

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:

  • Cost. The premium for the option on futures is based on actual cost. The security is treated like an equity option.

  • Notional Cost. The premium for the option on futures is based on notional cost. The security is treated like a future. If you choose this option, you must specify a value for the Variation Margin field, which becomes available.

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:

  • Yes. Calculate a daily variation margin and allow margin to settle into cash. If you choose this value, the system requires you to specify a value for the Variation Margin Rule field.

  • No. Do not calculate a daily variation margin. You can choose this option to process trades with no upfront costs, and not realize those costs until the option is sold or expires.

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:

  • Standard Life to Date Future. Supports options on futures that are based on standard life to date. Rounding occurs at the total position level. The field displays this value if you set the Primary Exchange Code field (tag 17) to LME.

  • Australian Government 10 Year Bond Future. Supports options on futures that are based on Australian 10 year bonds.

  • Australian Government 3 Year Bond Future. Supports options on futures that are based on Australian 3 year bonds.

  • U.S. Treasury. Supports options on futures that are based on U.S. Treasury securities. Rounding occurs at the individual contract level.

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.
This field appears if you set the Variation Margin Rule field (tag 2289) to Australian Government 10 Year Bond Future or Australian Government 3 Year Bond Future.

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:

  • Monthly

  • Quarterly

  • Semi-Annual

  • Annual

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:

  • Yes. The option has a call or put option.

  • No. The option does not have a call or put option.

Restricted Flag

1139

Indicates any trade restrictions on the security. Options include:

  • 144A. An SEC rule modifying a two year holding period requirement on privately placed securities to permit qualified institutional buyers to trade the positions among themselves.

  • Reg S. Various SEC rules relating to offers and sales made outside the U.S. without SEC Registration.

  • Reg D. An SEC regulation governing private placement exemptions. This rule allows some companies to raise capital through the sale of equity or debt securities without having to register the securities with the SEC.

  • Private Placement. The raising of capital using private rather than public placement. The result is the sale of securities to a relatively small number of investors.

  • 4(2) Paper

  • Other

  • None

Create Synthetic Cash Security

2300

Indicates whether to seed a synthetic cash security. Options include:

  • Yes

  • No

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:

  • Yes. The system reports the security as inactive.

  • No. The system reports the security as active.

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.
This field is required for an equity and fixed income option.

Underlying Ticker

1349

Specifies the ticker of the underlying security.

Underlying Asset ID

1348

Specifies the asset identifier of the underlying security.
This field is required for an equity and fixed income option.

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.