Execute an Options Contract

Executing an options contract creates:

  • A final settlement with zero value for the options contract
  • The underlying futures contract
  • A hedge action group for the options contract and its related futures contract

For the futures contract:

  • The market commodity and transaction type are from the Related Futures Market Commodity, as specified in the configuration of the market contract used for the options contract.
  • The hedge date is the execution date of the options contract.
  • The maturity date is the maturity date of the options contract.
  • The exercise price is a fixed price, and is the same as the strike price of the options contract.
  • The market price is based on the price in the price series at the maturity date.
  • Other data, such as the quantity, organisation and broker, are the same as the options contract.

Any despatch order or quota allocation on the options contract is moved from the executed options contract to the futures contract.

Unlike valuing a hedge position, executing an options contract can only be performed once.

An options contract can only be executed if it is locked and has not been withdrawn. The execution date must be consistent with the Options Execution setting in the settlement method configuration.

Options contracts do not need to be executed manually. If the settlement method configuration includes Automatic Execution, hedge revaluations can execute options contracts that are 'in the money' on the declaration date.

This activity is not applicable to futures, spread or swaps contracts.

Security Note: You need the Allow the user to maintain hedge actions security right in the Accounting user group security rights group for this activity.

Activity Steps

  1. Open the Hedging Explorer.
  2. Select the Hedge Actions tab.
  3. Find the options contract to be executed. See Find Hedge Positions.
  4. Lock the options contract. See Lock Hedge Positions.
  5. Right-click the options contract and select Execute from the menu.

    Note: Only a single options contract can be executed at one time.

    The Execute Hedge Action screen displays.

  6. Enter the Execution Date.

    The execution date must be consistent with the Options Execution setting in the settlement method configuration.

  7. Click Execute.

    MineMarket changes the Settlement State to Executed. and creates a final settlement with a margin price, net margin price, profit/loss, net present value, and total value of zero.

    MineMarket creates the related futures contract with any allocations that were previously on the options contract.

  8. Click Save.