Margin Requirement

1. Premium paid on or before T+1 (but no margin is needed) if buy an option (i.e. long position).
2. Margin is required when you sell an option (i.e. short position). Margin requirement and delayed stock option quotation can be downloaded from HKEX http://www.hkex.com.hk (Daily update).
3. However, if a writer sells a call option and the corresponding amount of shares had been used for covering, no margin is required.
4. For the strategy that combining one or more option positions, the margin requirements may not be the same as the amount listed by HKFE.
5. Stock Option is settled by stock delivery. Clients who are holding short position of call/put option should prepare enough stock or cash for settlement. For clients who are holding long position of call/put option, they should make own decision whether to close the position by 16：00 or inform our company to exercise the option by 17：00 on the last trading day. In addition, since only options that are 1.5% or more in-the-money upon expiration will be exercised automatically by the HKEX and that our company will not ask the client if they would like to exercise in/at-the-money options, clients who are holding in/at-the-money options should pay special attention on the exercise decision and its deadline.

All information is subject to change without prior notice.

Settlement issues

1. Clients should reserve enough cash for buying the underlying stock in case of the settlement of short put. The amount required should be available in the account on or before T+2 of the assignment. Please be reminded that client should close their positions on or before the last trading day if he does not wish to buy the underlying stock. Selling stock on T+1 upon the assignment would be regarded as late settlement as well.
2. Clients must prepare the underlying stock on or before T+2 for the settlement of short call. Any late settlement would be regarded as short selling.
3. Our company would exercise the stock option on behalf of our client on condition that they must have enough cash or underlying stock for the settlement if they wish to exercise put or call option.
4. Position limit is imposed by our company on each single stock option class according to its liquidity and the corresponding market capitalization. Clients could enquire and apply for extra position limit if necessary.
5. In case of holding In-the-Money options, clients must have sufficient stocks or funds for settlement purpose. Otherwise, our company reserves the rights to close the corresponding positions on or before expiry dates.

In the event of any late settlement of stock options assignment, interest on the late settlement amount and a penalty equivalent to 0.05% of the assigned value (subject to a min. amount of HK$200) would be charged. Moreover, our company reserves the rights of restricting stock options assignment and exercise of such client in the future.

All information is subject to change without prior notice.

Position Limits and Large Open Positions Reporting Requirements

In accordance with the Chapter 571Y Securities and Futures (Contracts Limits and Reportable Positions) Rules, no person, other than the person authorized, may hold or control futures contracts or stock options contracts in excess of the prescribed limit. Section 6 of the Rules stipulates that any person who holds or controls a reportable position shall lodge a notice in writing of that reportable position with the recognized exchange company concerned.

CHIEF, as your agent, submits a notice of a reportable position to the Exchange. In the event that you hold or control a reportable position in accounts at more than one Exchange Participant, you should assume the sole responsibility to notify the Exchange of the reportable position.

For details of the "Position Limits and Large Open Positions Reporting Requirements", please visit the following webpages:

• HKEX - Large Open Positions and Position Limits
• SFC - Guidance Note on Position Limits and Large Open Position Reporting Requirements