Options are settled on a net basis of common shares, how are equity and capital reserve converted?

This question is actually based on the understanding of options:

Regardless of whether the final exercise method of the option is ** or cash, the exercising party is earning the price difference - exercising at 102, actually **104, exercising with cash to get (104-102) * number of shares = ; Exercising the option with ** is equivalent to paying less——

Either way, the difference is earned

If you buy ** with the difference paid, you can buy (104-102) * number of shares ****104 = This is the net settlement of common shares - that is, the number of shares of common stock that can actually be purchased by the difference earned after exercising.

There are three ways to settle options:

Cash spreads. The number of shares of common stock that can be bought at the price difference - the net amount of common shares.

Agree on **** common shares with options - you can pay less cash difference.

The problem with the teaching materials is that there are only norms for dealing with them, and there are no reasons for why they are being handled. It seems like a hassle and needs to be thought through for yourself.

Upstairs is the right solution. On the day of settlement, the fair value of the option on the day of **market price = the number of shares that can be exchanged, settled by net of ordinary shares, if exercised, it will eventually be transferred to the issuer's**. Share capital = 2000 104 = capital reserve =

Option Fair Value **Market Price = Net Common Shares.

i.e.: 2000 104=

Capital reserve =

On the day of settlement, the fair value of the option on the day of **market price = the number of shares that can be exchanged, settled by net of ordinary shares, if exercised, it will eventually be transferred to the issuer's**.

Options, also known as options, are derivative financial instruments. It refers to the right that can be bought and sold in a certain period of time in the future, and is the right of the buyer to purchase or ** a certain amount of specific subject matter from the seller in the future for a certain period of time (referring to American options) or at a specific date in the future (referring to European options) with a predetermined ** (referring to the performance**), but does not have the obligation to buy or sell.

**Class settlement method.

The settlement method of futures loan is very similar to the settlement method of ** market, and also adopts a daily settlement system. **This is how the market is usually settled.

However, due to the greater risk of adopting the ** settlement method, many exchanges only use the ** settlement method in ** options trading, while still using ** type settlement method in ** options and stock index options trading. In this way, the settlement procedure for options trading can be greatly simplified by the fact that the settlement procedure for options and their underlying assets is the same.

Contract. The so-called option contract refers to a standardized contract in which the buyer of the option pays a certain amount of premium to the seller of the option, that is, obtains the right to buy or sell a certain number of relevant commodities within the specified period of time according to the pre-agreed contract, and the buyer can also waive the exercise of this right as needed. The main components of an option contract are as follows:

Buyer, seller, royalty, finalization**, notices and expiration dates, etc.

Cash for common stock! The number of shares is determined, as an equity instrument, and the others are either paid in cash, or the number of shares paid is not fixed, so it is a financial liability such as renting!

It should be the issuer to pay ** (it may be that the textbook you read equates ** with the share capital, so that it is not easy for people to understand the loss of the world), increase the share capital.

It should be said that this kind of option is a equity-type warrant, although this kind of warrant can be classified as a call option, because generally only when the underlying market price is higher than the exercise of the option, the investor will exercise the option, if it is not higher, it is equivalent to buying ** in the market higher than the **, it must be clear that this kind of warrant is issued by the company of the target as the issuer, when the option is exercised, the target company itself can perform the obligations of the option contract in the form of additional issuance ( In fact, the issuer pays **, increasing the share capital), and the additional issuance ** is equivalent to an increase in the share capital, and the increase in its accounting book will be reflected in the credit for the share capital.

Issuing options based on one's own rights and interests.

1) Settle on a cash net basis-

This means that when an unfavorable condition occurs with an option, the buyer can exercise the option, but only by receiving the option's fair value.

The net amount of the exercise in cash cannot receive the issuer's equity. This is also an ordinary derivative instrument, which is regarded as a financial liability for the issuer.

It cannot be counted as an equity instrument.

2) to common stock.

Netting -

In the event of an adverse condition, the purchaser may exercise the option by receiving an issuer's equity instrument equivalent to the net fair value of the option. This will lead to the need for the company to "deliver a non-fixed number of its own equity instruments", which are also financial liabilities.

3) Cash-for-** settlement.

It means that when unfavorable conditions occur, the purchaser can exercise the option by delivering a fixed amount of cash in exchange for a fixed amount of equity instruments of the issuer as agreed. In this way, it satisfies the "exchange of a fixed amount of its own equity instruments for a fixed amount of cash", so such derivatives should be regarded as equity instruments.

It is the fair value of the option on the day of settlement**Market price = the number of shares that can be exchanged, and the settlement is based on the net amount of ordinary shares. The first question is to take it in points -

Today's options** divided by the day's share price.

It is the fair value of the option on the day of settlement**Market price = the number of shares that can be exchanged, and the settlement is based on the net amount of ordinary shares.

Scenario 1: The option will be settled on cash net Company Y will receive cash on the expiration date.

Scenario 2: Settle accounts with net common shares Converted into common shares at maturity and settled as common shares.

Scenario 3: Cash-for-common stock settlement The purchase of common shares in cash is prepared for rough settlement.

The difference between the lines that are greater than is: Credit: Fair value change gain or loss or fair value change gain or loss previously accrued in the carry-forward.

Common stock is a type of **, as opposed to preferred stock. It is the most basic share class of a company. In listed companies, this type of listing is generally carried out on the stock exchange and usually accounts for the majority of the company's capital.

Risk: Max.

Foreign name: Imitation belt town ordinary share, common stock

Exchanges: Shanghai and Shenzhen**.

Distinction: Preferred shares.

Circulation: maximum.

Chinese name: common stock.

Cash for common stock! The number of shares is determined, as an equity instrument, while the others are either paid in cash or the number of shares paid is not fixed, so it is used as a financial liability!

It's the day of settlement.

The fair value of the option On the day**market price = the number of shares that can be exchanged, it will be settled on the net amount of common shares, and if the option is exercised, it will still be transferred to the issuer's **!

First question. Divide and take.