What Is an Options Disclosure Document (ODD)?

The options disclosure document (ODD) is a publication issued by the Options Clearing Corporation (OCC) that serves as an important guide for options traders. The comprehensive document—formally titled Characteristics and Risks of Standardized Options—is particularly essential for novice options traders.

Options are financial derivatives based on the value of underlying securities such as stocks. Options give investors the right, but not the obligation, to buy or sell an underlying asset at an agreed-upon price within a specific time frame.

The ODD booklet includes definitions for the most common options trading terms and useful examples illustrating various trading scenarios. It provides general disclosures on the risks of trading options. Both the Securities Exchange Act and the Financial Industry Regulatory Authority (FINRA) require brokers and brokerage firms to deliver the options disclosure document and its supplements to customers.

Key Takeaways

  • The Options Clearing Corporation is responsible for issuing the options disclosure document and its supplements.
  • In 1994, the OCC distributed the first options disclosure document, which provides investors with important educational information regarding options trading.
  • The 183-page booklet covers topics important to options investors such as options definitions, index options, debt options, foreign currency options, and risks of options trading.
  • Investors can obtain copies of the booklet and supplements through their broker or online at the OCC's website.

Understanding an Options Disclosure Document (ODD)

Founded in 1973, the OCC clears transactions for exchange-listed options, security futures, and over-the-counter options. As the world's largest equity derivatives clearinghouse, the OCC operates under the jurisdiction of the Commodity Futures Trading Commission and the Securities and Exchange Commission (SEC).

In February 1994, the OCC distributed the first edition of the options disclosure document (ODD), which has taken on a number of supplements over the subsequent decades. These supplements clarify earlier concepts and accommodate the growing complexity of options products over the development of the derivatives market.

The current version of the document runs 183 pages. The main chapter headings include:

  • Options Nomenclature
  • Options on Equity Securities
  • Index Options
  • Debt Options
  • Foreign Currency Options
  • Flexibly-Structured Options
  • Exercise and Settlement
  • Tax Considerations, Transaction Costs, and Margin Requirements
  • Principal Risks of Options Positions

Starting in December 1997, the Options Clearing Corporation began adding supplements to the end of the ODD booklet. These supplements serve to add new information, amend previously published information, or replace sections of the booklet. The supplements from 1997 through 2012 are included in the ODD booklet.

The most recent ODD supplement is dated October 2018 and is a separate document of 16 pages. Among the changes included in this update, which amended the April 2015 supplement, were modified sections dealing with implied volatility index options and foreign index options.


The total number of contracts cleared by the OCC in 2019. This includes equity, index, single stock futures, and index/other futures contracts.

Requirements for Options Disclosure Document (ODD)

Because the ODD is considered a key publication in assisting investors to understand the complexities of options trading, there are rules to ensure each investor has ready access to the document.

The SEC is responsible for approving the supplements to the options disclosure document. Brokers are required to deliver the ODD and supplements to their customers, according to Rule 9b-1 of the Securities Exchange Act. FINRA also has its own rule requiring brokers to supply their customers with the most current ODD. This must occur at or before the time the broker approves the customer to trade options.

Additionally, FINRA requires brokers to distribute each new ODD supplement to customers who have already received the ODD. Firms can transmit the ODD and supplements to their customers via a mass mailing or electronically to those customers who have consented to electronic delivery.

You can find both the October 2018 supplement and the main ODD booklet as PDF downloads on the Options Clearing Corporation's website.

Special Considerations

Aside from the basic description of various option types, perhaps the most important section of the ODD is the "Principal Risks of Options Positions." Someone new to the options markets would be wise to carefully read this section, which goes over the main risks of each of the option types explained in the document and provides some examples of how a trader may lose money. Even a seasoned trader would find the document useful for reminders. The risk disclosure segment bluntly begins: "An option holder runs the risk of losing the entire amount paid for the option in a relatively short period of time."

The ODD goes on to explain other options trading risks such as various risks to option writers, risks of combination transactions (such as option spreads), risks occurring from the disruption in the markets of underlying assets, and special risks of index options.