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Understanding Options and Warrants in Government Managed Accounts

Options and warrants are financial instruments that provide the right, but not the obligation, to buy or sell a security at a certain price by a certain date. While options are typically traded on exchanges, warrants are usually issued by the company itself. Conflicts of interest and reporting requirements exist for both, and understanding the differences between them is crucial for ethical investing in government-managed accounts.

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Understanding Options and Warrants in Government Managed Accounts

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  1. I Institute for Ethics in Government

  2. Managed Accounts Call/Put Options Warrants   

  3. x Y $2,501-$5,000 $50,000-$100,000

  4. What is an option? A contract that gives the right, but not obligation, to buy or sell a security for a price certain on or before a future date certain.

  5. Reporting Questions: 1. Did the filer buy or sell the option? 2. Has the option been exercised, sold, or closed?

  6. Calls Puts Holder Buy The right to buy Buy The right to sell Writer Sell Has obligationto sell Sell The obligation to buy

  7. Not exercised, in the money

  8. Not exercised, out of the money

  9. Option that was resold

  10. Open position

  11. Closed position

  12. Report like any other stock

  13. Conflicts of Interest 1.Create an equity interest 2.Exemptions for securities NOTavailable

  14. What is an warrant? A derivative that gives the right, but not obligation, to buy or sell a security for a price certain on or before a future date certain.

  15. That sounds like an option. What’s the difference?

  16. 1.Warrants are usually issued by the company that also issues stock covered by the warrant 2. Warrants tend to have longer periods before their expiration dates 3. Conflicts analysis is the same as for options

  17. Not exercised, in the money Mapster Inc. Warrant to buy exp. 5/2021 MapsterInc. Warrant to buy (value not readily ascertainable): 100 shares, strike $9 exp. 5/2021 warrant

  18. Not exercised, out of the money Mapster Inc. Warrant to buy exp. 5/2021 MapsterInc. Warrant to buy (value not readily ascertainable): 100 shares, strike $9 exp. 5/2021 warrant

  19. Mapster Inc. Warrant to buy exp. 5/2021 MapsterInc. Warrant to buy (value not readily ascertainable): 100 shares, strike $9 exp. 5/2021 warrant Warrant that was resold

  20. Conflicts of Interest 1.Create an equity interest 2.Exemptions for securities NOTavailable

  21. IInstitute for Ethics in Government

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