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EFTA01353465

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option that is associated with any given change in the price of the underlying security will lend to be larger for many such debt options. If the unit of trading for a physical delivery price- based debt option is smaller than 51.000,000, inves- tors who buy or write options covering principal amounts other than a multiple of 51 ,000,000 may be disadvantaged by having to deal in an odd-lot market for the underlying debt security at prices that are less favorable than for round lots. 3. In the event of a shortage of the underlying debt security deliverable on exercise of a physical delivery price-based debt option OCC has the authority to per- mit other generally comparable securities to be deliv- ered in fulfillment of the delivery obligation. If OCC exercises its authority to allow such other securities to be delivered, it may also adjust the exercise prices of the affected options by setting different prices at which otherwise non-eligible securities may be delivered. As an alternative to permitting such substitute deliveries. OCC may impose special exercise settlement proce- dures similar to those applicable to stock options, in- cluding the fixing of a cash settlement price payable by writers who would otherwise be unable to meet their delivery obligations (see "Settlement" in Chapter VIII). and/or prohibit the exercise of puts by holders who would be unable to meet the resulting settlement obli- gations (see paragraph 5 under "Risks of Option Hold- ers" above). 4. The hours of trading for debt options may not conform to the hours during which the debt securities are traded. To the extent that the options markets close before the markets for the underlying or other related instruments, significant price and rate move- ments can take place in the underlying markets that may not be reflected in the options markets. The pos- sibility of such movements should be taken into ac- count in relating closing prices in the options markets to thos

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