What is a put and call option
This means that the seller can exercise its put option during the put option exercise period and require the buyer to buy the land. Neither party is compelled to exercise their option during the relevant option exercise period.
If neither party exercises their option, the option comes to an end at the expiration of the final option period. This means that the buyer loses the exclusive right to buy the land and the seller loses its buyer but is otherwise free to deal with the land. Assignment A buyer who has entered into a call option deed, but has not yet exercised the call option, may be entitled to assign its rights under the call option deed to a third party. On completion of the assignment, the third party will step into the shoes of the buyer as if it were the original buyer under the call option deed.
The third party and the seller then proceed with the transaction in accordance with the terms of the call option deed. Nominations A buyer may also be entitled to appoint one or more third parties as a nominee to exercise the call option on behalf of the buyer. The appointment of a nominee is different to an assignment where the buyer assigns its rights under the call option deed.
If a nominee does exercise the call option, the contract which comes into existence will be between the nominee and the seller, instead of between the buyer and the seller. When a put option or a call option is exercised, stamp duty becomes payable by the buyer as it normally would for a standard conveyance ie, on exchange of contracts.
Stamp duty implications also arise when assigning an option or appointing a nominee to exercise an option. The stamp duty liability can be significant and specialist stamp duty advice should be sought if an assignment or nomination is considered.
The above is a brief summary of some of the main matters an option deed should contain. However, there are many more considerations to take into account.
It is important that an option deed is tailored to your role in the transaction and also the outcome that you want to achieve. Swaab Attorneys' property team have in depth knowledge and experience in acting for buyers, owners groups and sellers on put and call option transactions.
We have recently acted for a number of clients who have utilised put and call options to acquire an interest in multi-titled sites or market an interest in multi-titled sites for development, DA approval and assignment. If you would like to republish this article, it is generally approved, but prior to doing so please contact the Marketing team at marketing swaab.
This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.
Swaab Attorneys search swaab. What is a call option? A call option is beneficial to a buyer, with some of the main advantages being: What is a Put option?
Moreover, the dependence of the option value to price, volatility and time is not linear — which makes the analysis even more complex. From Wikipedia, the free encyclopedia. This article is about financial options. For call options in general, see Option law. This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. October Learn how and when to remove this template message.
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