Options

What are options?

Options (Exchange Traded Options or ETO's) are traded on a separate market from ASX Equities, Warrants and Company Options. Options are traded on CLICK and have T +1 settlement.

Options can be either Call Options or Put Options:

• A Call Option gives the holder the right but not the obligation to buy the underlying security or index at or before the expiry date.
• A Put Option gives the holder the right but not the obligation to sell the underlying security or index at or before the expiry date.

Options are available on the following indices - XJO (S&P ASX 200), XPJ (S&P ASX 200 Property Trust) and XFL (S&P ASX 50).

What are the trading hours?

What are the characteristics of options?

Strike Price (or Exercise Price) - The Price at which the underlying shares are bought (calls) or sold (puts) as specified on the option contract.

Premium - The amount paid or received on the market to enter or close an option position. The premium of the option fluctuates as the underlying equity or index changes. Other factors such as volatility, dividends, time and interest rates may affect the option premium. The option premium is quoted in cents.

Expiry - The last day the option may be traded or exercised.

Contract Size - The number of shares that make up an option contract. This is usually 100 shares per contract, however this is not always the case.

Expiry Type - Options may be European or American. European options may only be exercised on the expiry day. American Options may be exercised any time before or on the expiry day. The majority of Equity options available in Australia have American Expiry. All Index options have European Expiry.

Covered Calls - Covered Calls are a strategy that involves selling options to open a position using stock collateral that is currently sponsored by us. For example if I held 100 TLS shares on my HIN, I could write (sell to open) 1 TLS $5.00 call option for December for example. I would receive a premium for selling this option, however I have an obligation to sell my TLS shares at $5.00 at or before the end of December. When carrying out this kind of transaction, your shares to cover the position will be lodged at ASX Clear as collateral. Shares will be held as collateral until you are either assigned (required to deliver these shares) or you wish to withdraw them from ASX Clear. You may withdraw these shares provided that you do not currently have any open option positions written against them. You may buy back a short option position any time provided that you have funds to do so.

Example 1: If I buy 5 TLS $5.00 March call options @ 20c. I have the right to buy 500 TLS @ $5.00 at or before the end of March. I have paid 20c per share to enter this contract. The total cost of this transaction is $100 (20c x 100 x 5) plus brokerage + fees.

Example 2: If I buy 10 CBA $37.50 July put options @ 80c. I have the right to sell 1,000 CBA @ 37.50 at or before the end of July. I have paid 80c per share to enter this contract. The total cost of this transaction is $800 (80c x 100 x 10) plus brokerage + fees.

How do I place an options order?

You can trade online by selecting Trading > Options Orders > Place Order when you have logged into your account.

Alternatively, you can phone our Derivatives Trading Desk on Freecall 1800 888 223. To place an order you will need funds in your Options Trading Account. You will need to provide the details of your Options Trading Account number, your Options password and the details of the order you wish to place.

How do I know if my order has transacted?

We will email confirmation of your options transaction shortly after the trade has taken place. You will also be able to see the details online.

How do I exercise an option?

To exercise an option position, you will need to notify us via our Freecall Trading Desk on 1800 888 223. You will need cleared funds or stock in your Equity Trading Account to settle the trade.

What do Market Makers do?

Market Makers compete against each other whilst trading on their own account and at their own risk. They can be either individuals or firms and they improve the liquidity of the market by providing markets in option series.

What Strategies can I trade?

You can apply for either Tier 1 or Tier 2 access. The strategies available for each are as follows:

• Tier 1 – buying options (puts and calls) and selling covered calls
• Tier 2 – Tier 1 strategies plus selling uncovered puts and calls

You need to successfully pass the quiz in the application form if you wish to use Tier 2 strategies.

How can I find out Option Prices?

Option prices are available on the website or you can call our Derivatives Trading Desk on Freecall 1800 888 223.

How do I view my positions?

We will email your account position each night. This report will show your option positions at the end of the day, funds currently sitting in your options account and the details of any transactions you have done in the previous business day.

More Information

The ASX provides educational information on trading Options. Click here to learn more about options.

How to apply:

1. You must have an existing Netwealth Share Trading account.


2. Read the Financial Services Guide, ETO Product Disclosure Statement, ETO Target Market Determination and the ASX Understanding Options Trading Booklet.


3. Complete the Exchange Traded Options Application form. You are required to complete the Suitability Questionnaire within the application. Tier 1 applicants need to complete questions 1-10, Tier 2 applicants need to complete questions 1-18.


4. If you have an existing Tier 1 account and would like to upgrade to Tier 2, please complete the Tier 2 Trading Upgrade form.

Please note: For Joint and Company/Trust accounts, we require up to 3 account holders to complete and satisfactorily pass our ETO Suitability Questionnaires.

For Self-Managed Super Fund (SMSF) accounts, we require ALL account holders to complete and satisfactorily pass the ETO Suitability Questionnaires. Where there are more than 3 account holders, please repeat one of the additional Suitability Questionnaires found on the ETO forms section of our website.

If you have any questions, please contact our Derivatives Trading Desk on Freecall 1800 888 223 or via email options@sharetrading.netwealth.com.au.

How much does it cost to trade Options?

To view the schedule of fees, please view the schedule of fees here.

Do any other Fees apply to Option Trading?

Each time you trade options you pay an ETO Contract Fee of $0.13 (exc. GST) per equity contract and $0.35 (exc. GST) per index contract. This applies for all buy and sell transactions. If you exercise an option (or are assigned on an option position) you will also pay an ETO Contract Exercise Fee of $0.05 (exc. GST) per equity contract and $0.35 (exc. GST) per index contract.

How do I transfer Option Positions from Other Brokers?

To transfer option positions from another broker you will need to provide written Authorisation.
This will need to include:

• The name of the other broker from which you wish to transfer the positions
• The details of the positions (eg the option code and quantity)
• Your Options Account Number with us
• The signatures of all account holders