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John Doe

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CHARACTERISTICS AND RISKS

OF STANDARDIZED OPTIONS
February 1994
1997 through 2012 Supplements included

BATS Exchange, Inc. 8050 Marshall Drive Lexena, Kansas 66214 C2 OPTIONS EXCHANGE, INCORPORATED 400 South LaSalle Street Chicago, Illinois 60605 CHICAGO BOARD OPTIONS EXCHANGE, INCORPORATED 400 South LaSalle Street Chicago, Illinois 60605 INTERNATIONAL SECURITIES EXCHANGE, LLC 60 Broad Street New York, New York 10004 NASDAQ OMX BX, INC. 101 Arch Street Boston, Massachusetts 02110 NASDAQ OMX PHLX, INC. 1900 Market Street Philadelphia, Pennsylvania 19103 NASDAQ STOCK MARKET, LLC One Liberty Plaza 165 Broadway New York, New York 10006 NYSE AMEX LLC 11 Wall Street New York, New York 10005 NYSE ARCA, INC. 100 South Wacker Drive Chicago, Illinois 60606

1994 American Stock Exchange, LLC, Chicago Board Options Exchange, Incorporated, New York Stock Exchange, Inc., NYSE Arca, Inc. and Philadelphia Stock Exchange, Inc.

CHARACTERISTICS AND RISKS OF STANDARDIZED OPTIONS
TABLE OF CONTENTS Page CHAPTER I—INTRODUCTION . . . . . . . . . . . . . . 1 CHAPTER II—OPTIONS NOMENCLATURE . . . . . . 5 CHAPTER III—OPTIONS ON EQUITY SECURITIES 18 Features of Stock Options . . . . . . . . . . . . . . . . . 18 CHAPTER IV—INDEX OPTIONS . . . . . . . . . . . . . 23 About Indexes . . . . . . . . . . . . . . . . . . . . . . . . 23 Features of Index Options . . . . . . . . . . . . . . . . . 26 CHAPTER V—DEBT OPTIONS . . . . . . . . . . . . . . 29 Rates, Yields and Prices of Debt Securities . . . . . . . 29 Treasury Securities . . . . . . . . . . . . . . . . . . . . . . 31 Yield-Based Options . . . . . . . . . . . . . . . . . . . . . 32 CHAPTER VI—FOREIGN CURRENCY OPTIONS . . 35 Market for Foreign Currencies . . . . . . . . . . . . . . . 36 Special Characteristics of Foreign Currency Options . 37 ......... ......... ......... ......... CHAPTER VII—FLEXIBLY STRUCTURED OPTIONS Special

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