Contract options

These contract options are available for online trading through the Royal Capital

Short trades in contract options

By default, you will not be able to trade Short Contract Options. Short selling of Contract Options is allowed for individually evaluated clients who have achieved an advanced margin profile. Please contact your account manager for more information.

Partial fillings

Partial fills can occur on Limit orders and the remaining quantity remains on the market as a limit order and can be filled within the duration of the order. Market orders can be filled on numerous levels; The price paid will be the volume weighted average price of all fillings.

Exercise and Settlement

Royal Capital offers two types of contract options as defined by the exchange and derivatives provider:

• American-style options can be exercised online at any time before expiration, with the exception of the last trading day.
• European-style options can only be self-exercised upon expiration.

When in-the-money, a US-style Contract Options position can be exercised on a specific Futures Contract position, which is visible in the Account Summary until expiration. Once the Contract Option expires, the position remains visible in the Account Summary until the settlement day (specific to the instrument). A European-style option, when in-the-money, is only exercised at expiration and settled in cash.

Exercise cut

Exercise requests must be entered before the exercise cutoff time specified by Royal Capital; See these in the Contract Options Settlement Conditions. The exercise closing time faced by Royal Capital clients is prior to the cut-off hours defined by the exchange in order to give Royal Capital and its brokers the time to submit the request to the exchanges. If exercise requests are entered after the cut-off time, clients will be rejected and the client will have to wait until the next day to exercise before the cut-off time.

Last trading day

On the last trading day, clients will not be able to exercise any position, since the expiration self-exercise process will manage the exercise against the liquidation value of the exercise.

Expiration and self-exercise

When Contract Options are traded on Royal Capital all Option positions are subject to a self-exercise procedure upon expiration:

All long options in money are assumed to be exercised

All short positions in options in the money are assumed to be allocated

All out-of-the-money options positions are abandoned

A call option is in the money when the strike price is below the market price of the underlying asset. A put option is in the money when the strike price is above the market price of the underlying asset.

The abandonment of positions in the money is not supported. Therefore, clients must close their Option positions before expiration.

Some exchanges may have different thresholds for determining whether an option is OTM or ITM. The typical convention is only one point ITM, although, for example, for Hong Kong stock options, an option is only being exercised / allocated if it is at least 1.5% ITM. Otherwise the options are considered as OTM.

Full Premium vs. futures style premium

When purchasing a long position in a Full Premium Contract Option, the premium amount is deducted from the client's cash balance. The value of a Long Open Option position will not be available for margin trading other than as indicated in the margin reduction schemes.

Royal Capital will treat future style premium options as deferred premiums.

As such, aside from market conventions, unrealized gains / losses are not processed daily into clients' cash balance. Instead, the original premium amount will remain in the unreserved transactions until the final settlement of the Option or when the position is closed.

In this way, all other values ​​in the account summary can be treated the same as the full premium options.

Deactivation of the underlying asset.

If the Exchange deactivates the underlying asset, Royal Capital will notify its clients and remove the related positions from clients' trading accounts.