SCOTTRADE OPTIONS AGREEMENT
THIS IS A CONTRACTUAL AGREEMENT - DO NOT SIGN THE OPTIONS APPLICATION
UNTIL YOU HAVE READ THIS AGREEMENT CAREFULLY
With respect to any transaction effected by or on behalf of SCOTTRADE, INC. and its family of companies ("Scottrade," "We," or "Us") on my behalf for the purchase and/or sale of any options contract (puts, calls, etc.), listed on any exchange or traded in any market, I agree and represent hereby as follows:
1. I have received and examined a copy of the options disclosure brochure entitled Characteristics and Risks of Standardized Options, which has been made available to me by Scottrade, Scottrade.com or CBOE.com and is also available upon request. I understand and am prepared to take the risk involved in trading options contracts. Neither Scottrade nor its agents are under any obligation to convey any information to me relating to the underlying securities or indexes covered by any option, or to any securities or indexes related thereto, and no information so conveyed shall be construed as creating an implied agreement or course of dealing requiring Scottrade or its agents to convey any further information to me.
2. It shall be my sole responsibility to exercise, in a proper and timely manner, any right, privilege or obligation of any put, call or other option which Scottrade or its agents may purchase, handle, endorse or carry for my account. Whether acting alone or in concert with others, I agree not to exceed the position limits set for my account by Scottrade or its agents, any exchange or market, or any other regulatory authority having jurisdiction.
3. I agree to immediately deliver any funds or securities required as the result of the exercise or assignment of options contracts in my account. In their sole discretion and without notification to me, Scottrade and its agents are authorized to take any and all steps necessary to protect Scottrade or such agents from loss or damage arising out of any option transaction in my account. This discretion applies regardless of any past action taken or not taken by Scottrade or its agents, and is in no way to be construed as an obligation on the part of Scottrade or its agents to take such action on my behalf. Should Scottrade or its agents deem it necessary for their protection for any reason, or if I die, I hereby authorize Scottrade and its agents to buy, sell or sell short any option or security in my account, depending on my risk level. I agree to reimburse any and all expenses Scottrade or its agents incur in connection with such transactions.
4. This Agreement shall apply to all put, call or other options which Scottrade or its agents may have previously purchased, sold, executed, handled, endorsed or carried for my account and shall also apply to all put, call or other options which Scottrade or its agents may hereafter purchase, sell, handle, endorse or carry for my account and shall inure to Scottrade's or its agent's benefit as now or hereafter consulted.
5. I understand that Scottrade and its agents use a random method for allocation of exercise assignment notices for option contracts. This allocation method randomly selects from among all my short option positions, including positions established on the day of assignment. All short option positions are liable for assignment at any time. (A more detailed description of this procedure is available upon request.) I agree to be bound by such allocation method and also agree that, if an exercise notice is assigned to my account, the underlying security (or sufficient cash in the case of stock index options) will be delivered to Scottrade within the stated period of time in the case of a call, and sufficient cash to effect settlement of the assignment will be delivered to Scottrade in the case of a put.
6. If an account has an option position on the last trading day prior to expiration that closes $0.01 or more in the money, the option will be exercised automatically, unless I contact Scottrade with explicit contrary instructions by 4:00 p.m. Eastern Time. Scottrade and its agents reserve the right to require cash or securities in my account before exercising an option automatically or on my instruction. This discretion applies regardless of any historical patterns of action taken or not taken by Scottrade or its agents. In the event of such exercise, the proceeds in excess of commission costs created thereby will be credited to my account. In the event that the commissions to be charged for such an expiration transaction exceed the proceeds to be realized, I agree and hereby relinquish my ownership in said option to Scottrade, and Scottrade or its agents may exercise such options for Scottrade's account.
7. All transactions under this Agreement shall be subject to the rules, regulations, customs and practices of the exchange or market, and the Options Clearing Corporation, where such transactions are executed and/or cleared. All transactions are also subject to the rules and regulations of the Securities Exchange Commission, the Board of Governors to the Federal Reserve System, the Commodity Futures Trading Commission, the Financial Industry Regulatory Authority (FINRA) and all other applicable federal agencies, state agencies and self-regulatory organizations. Notwithstanding the foregoing, this Agreement is governed by Missouri law.
8. Whenever any statute shall be enacted or regulation made under any statute by any exchange, market or the Options Clearing Corporation that shall be applicable to and affect in any manner or be inconsistent with any of the provisions of this Agreement, the provisions of this Agreement so affected shall be deemed modified or superseded by such statute or regulation.
9. Communications may be sent to me at my address of record, and all communications sent, whether by first class postage paid mail, overnight courier or otherwise, shall be deemed given to me personally, whether actually received or not. Communications sent to me by first class postage paid mail shall be deemed received three business days thereafter. Communications sent to me by overnight courier or similar method, shall be deemed received one business day thereafter.
10. I acknowledge that I have received, read and agree to abide by the terms of Scottrade's Brokerage Account Agreement which contains a pre- dispute arbitration clause. The parties agree as follows:
(a) all parties to this agreement are giving up the right to sue each other in court, including the right to a trial by jury, except as provided by the rules of the arbitration forum in which a claim is filed.
(b) arbitration awards are generally final and binding; a party's ability to have a court reverse or modify an arbitration award is very limited.
(c) the ability of the parties to obtain documents, witness statements and other discovery is generally more limited in arbitration that in court proceedings.
(d) the arbitrators do not have to explain the reason(s) for their award.
(e) the panel of arbitrators will typically include a minority of arbitrators who were or are affiliated with the securities industry.
(f) the rules of some arbitration forums may impose time limits for bringing a claim in arbitration. In some cases, a claim that is ineligible for arbitration may be brought in court.
(g) the rules of the arbitration forum in which the claim is filed, and any amendments thereto, shall be incorporated into this agreement.
You agree to arbitrate any controversy between you and us (including any of our officers, directors, employees, or agents) arising out of or relating in any way to our relationship, your account, any account that you may cause to be opened with us in the future, or any service provided by us, including but not limited to : (a) transactions of any kind made on your behalf, through or with us; or (b) the performance, construction or breach of this agreement or any other agreement between you and us. If you are not a resident of the united states at the time a controversy subject to arbitration arises, you agree that any arbitration hearing shall be held in St. Louis, Missouri; you consent to the personal jurisdiction of all courts located in the state of Missouri for purposes of enforcing this arbitration agreement and any arbitration award; and you agree that any arbitration proceeding shall be conducted in the English language. If any party unsuccessfully resists confirmation or enforcement of an arbitration award rendered under this agreement, then all costs, attorney's fees, and expenses incurred by the other party or parties in confirming or enforcing the award shall be fully assessed against and paid by the party resisting confirmation or enforcement of the award.
No person shall bring a putative or certified class action to arbitration, nor seek to enforce any pre-dispute arbitration agreement against any person who has initiated in court a putative class action; or who is a member of putative class until: (a) the class certification is denied; or (b) the class is decertified; or (c) the customer is excluded from the class by the court. Such forbearance to enforce an agreement to arbitrate shall not constitute a waiver of any rights under this agreement except to the extent stated herein.
11. I have examined the entire Options Application and confirm to Scottrade and its agents the accuracy of all information contained thereon, especially those items concerning my income, net worth and investment objectives. If there is any change in my investment objectives or financial condition or other circumstances arise which may affect my ability to engage in options transactions, I will promptly advise Scottrade in writing.
12. I have executed Scottrade's Brokerage Account Application and Agreement, and that agreement and the terms and conditions therein are incorporated in this Agreement by reference. I hereby acknowledge possession and retention of a copy of this Agreement.
13. I request that Scottrade or its agents establish and maintain an options account for the purpose of trading options contracts. By signing this Agreement, I hereby confirm that I understand and agree to the terms and provisions on this form.
14. I agree that any data or online reports are provided to me without any warranties of any kind, express or implied, including but not limited to implied warranties of merchantability, fitness for a particular purpose or non-infringement. I acknowledge that the information contained in any reports provided by Scottrade or its agents is obtained from sources believed to be reliable but is not guaranteed as to its accuracy or completeness. Such information could include technical or other inaccuracies, errors or omissions. In no event shall Scottrade or any of its agents be liable to me or any third party for the accuracy, timeliness or completeness of any information made available to me, or for any decision I make or action I take in reliance on such information. In no event shall Scottrade, its affiliates or their respective entities be liable for any special, incidental, indirect or consequential damages whatsoever, including but not limited to any lost profits, whether or not advised of the possibility of such damages, or any damages for delayed data.
15. I agree that I may not amend or assign this Agreement without the express written consent of Scottrade. This Agreement will inure to the benefit of my successors and permitted assigns. If any provision of this Agreement is held to be unenforceable, it shall not affect any other provisions of this Agreement. I agree and acknowledge that neither Scottrade nor any of its agents shall be liable for losses caused directly or indirectly by any events beyond their reasonable control, including without limitation, government restrictions, exchange or market rulings, suspension of trading or unusually heavy trading in any security, war, strikes, or a general change in economic, political or financial conditions.
16. I understand that options are risky and I will limit my financial commitment to an amount that I can afford to lose.
17. I understand that Scottrade will make no recommendations and I agree not to hold Scottrade or its agents responsible for the suitability of trades or any subsequent losses in my account. The execution of any trades by Scottrade or its agents will not be deemed to be an approval of such trades.
18. I am responsible for reviewing and monitoring all activities in my account, and I understand that neither Scottrade nor its agents are required to monitor such activities for me.
19. Unless I receive prior authorization from Scottrade, I shall not place trades that are not permissible under the option level for which I am approved. If any option position in my account becomes uncovered, Scottrade may, without prior notice, take immediate action to cover my position, and I shall be responsible for any resulting losses.
20. I am responsible for knowing the deliverable(s) prior to engaging in an option transaction, as well as any changes in the deliverables while maintaining positions in my account. Possible sources for this information include: 1-888-OPTIONS, OptionsEducation.org, OptionsClearing.com and Scottrade's trading Web site.
21. I understand that custodial accounts and qualified retirement plans (excluding IRAs) are limited to covered call writing.
22. If this account is being opened on behalf of a corporation, partnership, investment club, retirement plan, trust, LLC or any other type of entity in which I have or have been granted control, authority, trusteeship, agency or fiduciary responsibility, I hereby warrant and verify that the entity is permitted to engage in options transactions and that I have been granted the authority on behalf of the entity to enter into this Agreement.
23. If I am unable to engage in closing transactions because there was no prevailing bid or offers in the secondary market, I am obligated to the open position held in my account until expiration or assignment.
24. If an investment advisor manages my account, I understand that Scottrade or its agents may rely on the advisor's investment experience in conjunction with my qualifying information when determining my eligibility to trade options. My options trading may be limited to closing transactions if I sever the professional relationship with my advisor. If that occurs, I must re-apply for options approval to maintain options trading privileges in my account.
25. In order to process options orders, my account must have cleared funds equal to or greater than the purchase price of the options contracts. Notwithstanding the foregoing, I am responsible for all orders, including, without limitation, any orders Scottrade or its agents execute to purchase options in my account even if the account does not contain sufficient cleared funds.
Click here to view the "Characteristics and Risks of Standardized Options"