Single Stock Risk Management: How to Participate

The following are some general guidelines that need to be met for an OTC equity option transaction to be considered a viable solution:

• Notional size of transaction should be greater than $1 million (number of shares times the stock price).
   
• The net worth of the investor should be greater than $5 million.
   
• The issuer’s stock should be public at least six months.
   
• The issuer should have a market capitalization of at least $500 million.
   
• The hedged shares should not exceed more than three times the average daily trading volume.
   
• The shares must be available to borrow, generally from institutions.