Option Disclosure Document


DEFINITION of 'Option Disclosure Document'

A publication issued by the Options Clearing Corporation (OCC) that first-time option traders are required to read before being allowed to make any option trades. The document prepares traders for the options market.

BREAKING DOWN 'Option Disclosure Document'

The document outlines the various types of options and requisite options terminology, provisions for exercising and settling options, tax implications and the unique risks inherent in derivative instruments.

  1. Derivative

    A security with a price that is dependent upon or derived from ...
  2. Options Clearing Corporation - ...

    An organization that acts as both the issuer and guarantor for ...
  3. Option

    A financial derivative that represents a contract sold by one ...
  4. Leverage

    1. The use of various financial instruments or borrowed capital, ...
  5. Option Agreement

    1. A signed agreement between an investor who is seeking to open ...
  6. Risk Lover

    An investor who is willing to take on additional risk for an ...
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    Mutual funds invest in not only stocks and fixed-income securities but also options and futures. There exists a separate ... Read Full Answer >>
  2. How does a forward contract differ from a call option?

    Forward contracts and call options are different financial instruments that allow two parties to purchase or sell assets ... Read Full Answer >>
  3. What are the main risks associated with trading derivatives?

    The primary risks associated with trading derivatives are market, counterparty, liquidity and interconnection risks. Derivatives ... Read Full Answer >>
  4. How can an investor profit from a fall in the utilities sector?

    The utilities sector exhibits a high degree of stability compared to the broader market. This makes it best-suited for buy-and-hold ... Read Full Answer >>
  5. What is the difference between derivatives and options?

    Options are one category of derivatives. Other types of derivatives include futures contracts, swaps and forward contracts. ... Read Full Answer >>
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