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Australian Clearing House Pty Ltd.

Adjustment (Exchange Traded Options) Following certain corporate actions for entities over which there are Exchange Traded Options, the ASX may make adjustments to Options specifications. Corporate actions resulting in a pro-rata or proportional change to an entity's ordinary share capital structure may be subject to Options Adjustments. Examples of pro-rata changes are special dividends declared, bonus issues, and share splits. Adjustments may be made to, contract size, exercise price, expiry date, number of contracts, or underlying securities. Adjustments are made in order to maintain the value of Option position.
Alerts Alerts are messages that you request us to send you either by push notification on your mobile phone or to your email address when certain market conditions that you have specified are met.
All Ordinaries Share Price Index

Measures the level of share prices at any given time for a major sample of companies listed on the ASX to determine the overall performance of the Australian sharemarket. Stock exchanges in other countries have similar indices e.g. Dow Jones Industrial Average (New York), FTSE (London) and Nikkei Dow (Tokyo).

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American Expiry (Exchange Traded Options) An Option expiry style allowing the holder to exercise at any time up to and including the date of expiry. The majority of Equity Options listed on the ASX have American style expiry.
Australian Securities and Investments Commission. The government body responsible under the Corporations Act for regulating companies, the issue and sale of shares and trust units, company borrowings, and investment advisers and dealers.
Assignment notice Refer to Exercise Notice.
ASTC ASX Settlement and Transfer Corporation Pty Ltd.
ASX Australian Securities Exchange.
At Limit
An order that places a limit on either the highest price you will pay or the lowest price you will accept.
At Market An order to buy or sell shares at the market price at the time the order is placed.
At the Money Refers to Options and Warrants with an exercise or strike price equal to or approximately equal to the underlying security.
Barrier Level Certain Warrants specify a barrier level. The barrier level is the price of the underlying which triggers an event for the Warrant. For example a knock out Barrier Warrant expires immediately upon reaching the specified barrier level. Refer to the Warrant issuer's Product Disclosure Statement for full details.
Bearish A market outlook held by an investor with expectations of falling prices.
A measure of correlation between a share price and the share market as a whole. Beta provides an indication of the likely movement of a share relative to the market. A share with a beta of 1.0 is expected to move in line with the market. A beta of > 1.0 suggests a share price will move more than the market and a beta of < 1.0 suggests a share price will move less than the market.
BPAY is an Australia-wide bill payment service that provides billers (such as electricity suppliers, stockbrokers and others) with the ability to receive payments from their customers electronically via major financial institutions. Through BPAY, customers pay their bills and transfer funds via any participating financial institution’s telephone banking system or internet facility where available.
Bid The price at which someone is prepared to buy shares.
Bonus shares/bonus issue Additional shares issued free to existing shareholders, usually in a predetermined ratio to the number of shares already held.
Browser A program that allows users to access documents on the World Wide Web (www). Netscape and Microsoft Internet Explorer are examples of browsers.
Bullish A market outlook held by an investor with expectations of rising prices.
Buy Write A trading strategy involving the simultaneous purchase of the underlying security and sale of Call Options representing the same number of shares purchased. The objective of this strategy is to earn income by having the Option expire Out of the Money, or to exit a stock at a predetermined price.
Call Option (Exchange Traded Options) An Option giving the holder the right, without obligation, to buy a fixed number of the underlying asset at the specified strike price, in accordance with the Options expiry style. As it is not possible to trade the underlying security in the case of Index Options, these Options are cash settled. Call Options increase in value as the underlying asset price increases, all other things being equal.
Called away Stock is Called away when a Call Option writer must sell the underlying security to the Option buyer upon exercise in order to fulfil their contractual obligation.
Cash covered A short Option position for which the writer has cash lodged as collateral with the ASX Clear to cover the margin. ASX Clear will use cash to cover a margin where stock or other acceptable security is not available.
Cash settlement Cash settlement upon exercise or expiry applies to certain Warrants or Options rather than actual delivery of the underlying security. This usually occurs when delivery of the underlying security is not possible or impractical. Index Options are an example of cash settled securities.
CIA Westpac Cash Investment Account.
Collateral Assets pledged as security for a loan or margin obligation. In the context of Options, the ASX Clear accepts approved shares, Warrants, and cash as collateral to cover margins. In the context of a margin loan, approved securities held in the account secure the loan. Collateral is subject to seizure in the event of default.
CHESS ASX Clearing House Electronic Subregister System. CHESS provides electronic transfer of share ownership.
Class of Option (Exchange Traded Options) There are two distinct classes of Options contracts, Calls and Puts.
Close Out (Exchange Traded Options) Liquidating an open Option position by executing an opposing trade for each contract in the same Option series. For example a short position opened by a 'sell to open' trade is closed out by executing a 'buy to close' trade for an equal quantity of the same Option.
Combination A combination or multi leg order involves the simultaneous trading of different Options series and/or the underlying security. Examples include Bull Call Spreads, Long Strangles, Short Straddles, and Stock combinations such as Buy Writes or Collars. Combination orders trade at a Net Price and fill in proportion to the quantity specified for each security or leg.
Company Issued Options Option to subscribe for shares at a prescribed price from the issuer at or before a prescribed future date (expiry date). Option holders are not considered shareholders until a conversion has taken place.
Contract Note A confirmation sent by a stockbroker to a client confirming a purchase or sale, showing details of the transaction, price, brokerage and other charges involved.
Conditional Orders Conditional orders are instructions that you give us based around a set of criteria or market conditions that must be met before your order is processed.
Convertible Notes Note holders are usually paid a prescribed interest payment over a prescribed term. The terms may allow note holders to redeem the notes or convert to ordinary shares, at either prescribed times or any time during the term of the note’s issue, or at the expiry of the note issue.
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Covered Calls A short call position for which the writer has the underlying stock lodged as collateral with the ASX Clear to cover the margin. The quantity of the underlying stock required for a Covered Call is equal to the number of contracts written multiplied by the contract size (or shares per contract).
Covered Option A short Option position hedged against adverse price movement by holding an offsetting position. A short position may be partially or fully covered. The offsetting position may be an Option, underlying security, or portfolio of securities. For example the Option position in a covered call strategy is offset by the underlying shares. Another example is a Bull Spread, the long position partially covers the short position, offering some protection against adverse price movements.
Cum dividend Cum means ‘with’. Shares quoted cum dividend entitle the buyer to the current dividend. The price of the shares will usually reflect the amount of the dividend.
Delivery The transaction of shares as fulfilment of an obligation arising from assignment on a short Option position. In the case of a buyer of a call exercising their position, the Option seller is required to sell the underlying security to the Option buyer. In the case of a buyer of a put exercising their position, the Option seller is required to buy the underlying securities from the Option buyer.
Delta An Options 'Greek' measuring sensitivity of Options value to change in price of the underlying security. Deltas range between -1 and 1, a positive delta indicates the Options value will move in the same direction as the underlying and a negative delta indicates the Options value will move in the opposite direction to the underlying. Call Options have a positive delta and put Options have a negative delta.
Derivatives Financial instruments deriving their value from the price or level of an underlying asset with a market price able to be determined. Examples of derivatives are Options, Warrants, futures, swaps, and forwards. Examples of underlying assets include shares, indices, interest rate securities, currencies, and commodities.
Distribution of part of a company’s net profit to shareholders as a reward for investing in the company. Usually expressed as a percentage of par value or as cents per share.
Dividend reinvestment scheme A scheme that allows shareholders to take their dividends in the form of additional shares without paying brokerage for the transaction.
Dividend yield This is the dividend shown as a percentage of the last sale price for the shares.
DIY DIY Super Working Account.
Equivalent Position An equivalent position describes a strategy with the same potential profit or loss as another investment. Equivalent position strategies are also known as synthetics. An example is a synthetic short stock strategy which involves buying a put and selling a call at the same strike to mimic the payoff of a short position in the underlying stock.
European Expiry (Exchange Traded Options) An Option expiry style whereby exercise is only possible on the expiry date. Index Options are European expiry.
Encryption Method of coding data so that it can only be read by the people it is intended for. The Westpac site uses 128-bit encryption for transactional services such as Broking and Banking.
Exchange Traded Options (ETOs)
A contract between two parties giving the buyer the right, but not the obligation to buy or sell a parcel of shares at a set price, on or before a predetermined date.
Ex dividend Shares sold ex dividend entitle the seller to retain the current dividend. Shares are quoted ex dividend one business day before a company's books close to determine shareholders entitled to the dividend.
Exercise Invoking the right attached to an Option or Warrant. Upon exercise, call holders are invoking their right to buy the underlying security. Upon exercise, put holders are invoking their right to sell the underlying security.
Exercise Notice An instruction notice issued by the ASX Clear to an Option seller upon exercise by the Option buyer. Call Option sellers are instructed to deliver the underlying. Put Option sellers are instructed to take delivery of the underlying.
Exercise Price The price at which an Option or Warrant can be exercised. The exercise price for deliverable Options or Warrants is the price at which the buyer of an Option may transact the underlying. For cash settled Options the exercise price is used to determine any cash settlement amount.
Expiry Month
The month in which an Option or Warrant expires.
Expiry/Expiration date
The last day on which an Option can be traded or exercised. After expiry all unexercised Options in an expiring series are cancelled and cease to exist the following day. The expiration date varies for Equity and Index Exchange Traded Options. Normally, Equity Options will expire on the Thursday preceding the last business Friday of the month; Index Options expire on the third Thursday of the month, unless otherwise specified by the ASX. 
Fair Value See Theoretical Value.
Firewall Network hardware and software that limits access between an internal network and the rest of the Internet.
The initial raising of capital by public subscription to securities, such as shares offered on the sharemarket for the first time. Also referred to as Initial Public Offering (IPOs).
Franked dividends
A dividend paid by a company out of profits, on which the company has already paid tax. The investor may be entitled to an imputation credit, or reduction in the amount of income tax payable, up to the amount of tax already paid by the company (Note - not all companies offer franked dividends).
Gamma An Options 'Greek' measuring change in an Options Delta to changes in the underlying share price.
Good-until-Filled/Cancelled An order that remains on the market for up to 21 calendar days with us unless it is filled or cancelled earlier.
A Holder Identification Number. Similar to a bank account number, a HIN is allocated to anyone with shares on the CHESS subregister. Each broker has a unique HIN for each client.
Holding statement
Similar to a bank statement, a CHESS holding statement indicates the number and type of shares you own at the beginning and end of a statement period as well as any transactions that have taken place. CHESS statements are usually sent monthly by CHESS if there has been any CHESS activity.
Implied Volatility
This is the volatility implied by the current premiums. Expected volatility is an input into the Theoretical Value calculation, by substituting the current premium for the theoretical value the formula can be solved for Expected Volatility. Implied volatility is therefore a market assessment of future volatility.
Index Multiplier
Applies to Index Options. This is the dollar value assigned to each point of premium to calculate a dollar value for the contract. For example, an Index Option trading at a premium of 100 points represents $1000 in dollar terms (100 points X $10).
In the Money An Option is said to be In the Money when it has intrinsic value.  A Call Option is In the Money when the Strike price is less than the current market price for the underlying. A Put Option is In the Money when the Strike price is greater than the current market price for the underlying.
Index Option
An Option deriving its value from a share price index. Index Options are available over the following underlying indices, XJO (S&P/ASX200 Index), XPJ (S&P/ASX200 A-REIT Index), and XFL (S&P/ASX 50 Index).
Intrinsic value
Applies to In the Money Options only and represents the difference between the Options Strike price and the current market price of the underlying security. For example a Call
Option with a strike price of $25 over an underlying trading at $30 has Intrinsic Value of $5.
Initial Public Offering. A first offering to the public of a company’s shares.
Integrated Accounts
Receive preferential brokerage by ensuring your settlement account is linked to your trading account via an eligible Westpac cash account, Westpac Online Investment Loan or BT margin loan.
Internet Service Provider. A company that provides access to the Internet.
Integrated Trading System. ITS matches buying and selling orders by price in the order they are entered in the market.
Leg Ratio
For multi leg orders the leg ratio is the leg quantity divided by the base quantity. The base quantity is the highest common denominator of leg quantities. For example a ratio call spread consisting of 20 bought calls and 10 sold calls has a base quantity of 10. The respective leg ratios for the bought and sold legs are 2 and 1. The Strategy ratio is therefore 2:1.
Listed Company
A company that has agreed to abide by market listing rules so that its shares can be bought and sold on the market.
Long Position
A position opened by buying a security. In the case of Options the Option taker has a long position.
Margin (Exchange Traded Options)
Margins apply to written Option positions to offset potential adverse movements in an Options value that represent a liability for the Option writer. Margins are calculated when a short position is opened and recalculated each night based on the change in value of the underlying securities that day. A favourable movement reduces the Option writers required margin and an unfavourable movement increases margin requirements. The ASX Clear require collateral to cover margin obligations.
Market Capitalisation
The market value of a company calculated by multiplying the number of securities on issue by the market price of those securities.
Market Price The prevailing price of shares traded on the ASX.
Minimum Parcel The minimum number of shares necessary for an initial purchase of a particular share. Once the first purchase has been made, shares may be bought and sold in any quantity.
NASDAQ National Association of Securities Dealers Automated Quotation.
NYSE New York Stock Exchange.
Offer The price at which someone is prepared to sell shares.
Open interest 
(Exchange Traded Options)
The number of Option contracts outstanding or open positions for a particular Options series.
Open order An order that remains unfilled or partially unfilled in the market.
OPIC The Opening Price Index Calculation is used to determine any cash settlement applying to Index Options at expiry. OPIC is based on the opening prices of the stocks in the Underlying Index on the morning of expiry.
Ordinary shares A class of shares that have no preferential rights. They are the most commonly traded security in Australia. Holders of ordinary shares are part owners of a company and may receive dividends if the company is profitable and declares a dividend.
Out of the Money An Option is said to be Out of the Money when it has no intrinsic value. A Call Option is Out of the Money when the Strike price is greater than the current market price for the underlying. A Put Option is Out of the Money when the Strike price is less than the current market price for the underlying.
P/E Ratio Price to Earnings Ratio. This ratio shows the number of times the share price covers the company's earnings per share over a twelve month period. It is a commonly used measure to indicate how attractive a share is to investors and to compare one company to another. This measure is based on the principal of shares being valued at the present value of cash flows to the holder.
Preference shares Rank above ordinary shares for claims on assets, earnings and dividends but rank below creditors and debenture holders. These shares usually have a fixed dividend rate.
Publicly Listed Company A company that has agreed to abide by market rules so that its shares can be bought and sold on the market.
Purge An order cancelled from the market by the Australian Securities Exchange.
Put Option An Option giving the holder the right, without obligation, to sell a fixed number of the underlying asset at the specified strike price, in accordance with the Options expiry style. As it is not possible to trade the underlying security in the case of Index Options, these Options are cash settled. Put Options increase in value as the underlying asset price decreases, all other things being equal.
Quote A live market quote will show the best bid (buy order) and the best offer (sale order) in the market at that moment. A previous day’s quote will show the best bid and offer as at the close of the market.
REITs Real Estate Investment Trusts.
Renounceable rights Renounceable rights issues are usually a form of capital raising. Existing shareholders are given the right to buy more financial products. (Usually below the prevailing market price.) This right is usually offered at a ratio to their current shareholding (e.g. one right for every ten shares currently held.) Shareholders can either accept the offer by paying ‘application money’ directly to the company or sell their rights on the market. A rights holder is not considered a shareholder until acceptance documents have been lodged with the company along with payment of the application money.
Rho An Options 'Greek' measuring sensitivity of Options value to change in the risk-free interest rate. Interest rates impact the carrying cost associated with an Options value and generally don't have a significant impact.
Rights issue A privilege granted to shareholders to buy new shares in the same company, usually below the prevailing market price.
Rolling/Roll over (Exchange Traded Options) Involves closing a position and simultaneously opening a new position in the same Option class for the same underlying. The position being opened may be for a higher strike (Roll Up), a lower strike (Roll Down), and/or for a different expiry month.
Split Order Where the quantity of an order is increased and the increased proportion is given a different time priority upon being placed in the market.
Standard Accounts Pay standard brokerage and settle to any bank account.
Straight Through Processing (STP) The process by which the trading system accepts orders electronically without being keyed or re-keyed by an operator.
Strike See Exercise Price.
SRN Shareholder Reference Number. (SRN can also refer to a security reference number.)
T+1 Is the abbreviated term for trade day plus 1 business day. T+1 is the normal settlement period for Exchange Traded Options transactions.
T+2 Is the abbreviated term for trade day plus 2 business days indicating when the settlement of the trade transaction occurs.T+2 is the standard settlement period of 2 business days after a trade is executed. On 7 March 2016 the ASX shortened the settlement period for cash market trades from T+3.
T+3 Is the abbreviated term for trade day plus 3 business days indicating when the settlement of a trade transaction occurs. On 7 March 2016 the ASX shortened the settlement period by one day to T+2. Refer T+2.
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Taker The buyer of an Options contract.
Theoretical value The value of an Option calculated using an Option pricing model. Also known as fair value.
Theta An Options 'Greek' measuring sensitivity of Options value to change in time. The measure states the decline in an Options premium (in cents) given the passing of one day.
An acronym for Theoretical Inter-market Margining System. The TIMS system is used by the ASX Clear to calculate the intra day risk of a client's Options portfolio. Based on the maximum probable adverse movement in the price of the portfolio a liquidation value for the portfolio is calculated. This liquidation value is then used to calculate margin obligations.
TMC See Combination.
Today Only An order which is valid only for the current trading day, from 10am to close of trading, and expires at the end of the day.
Warrant An exchange traded security issued by an institution such as a bank providing leveraged exposure to an underlying asset. Warrants are generally classified as 'investment Warrants' or 'trading Warrants'. Investment Warrants tend to be longer dated instruments and include Instalment Warrants, Endowment Warrants, and Structured Investment Products. Trading Warrants tend to be shorter dated instruments and include Call and Put trading Warrants and Barrier or Knock-out Warrants.