Options Customer Account Agreement
DriveWealth, LLC
To the extent that DriveWealth, LLC may purchase, or sell, endorse, handle or carry for your account any put option, call option, or other option, you agree to the terms and conditions of this Agreement between you and DriveWealth, LLC.
1. You understand that there are risks associated with options trading. These risks are described in the current Options Clearing Corporation (OCC) Disclosure Document entitled, “Characteristics and Risks of Standardized Options.” Customer acknowledges that they have read and fully understand the document and agree to seek clarification of any term, condition or risk contained in either of these documents, prior to making such acknowledgment to DriveWealth, LLC.
2. You are aware of such risks and will not engage in any option transaction unless you are financially able to sustain any loss arising from such transaction. You are aware that in particular the selling (writing) of naked calls or naked puts may result in substantial financial losses.
3. It shall be your sole responsibility to exercise, in a proper and timely manner, any right, privilege or obligation of any put option, call option or other option which DriveWealth, LLC may purchase, handle, endorse or carry for your account(s).
4. Where you are a seller of an option, DriveWealth, LLC is authorized in its sole discretion and without notification, in the event you do not meet DriveWealth, LLC's margin calls promptly, to take any and all steps necessary to protect itself from loss or damage arising out of any put option, call option or other option transaction made for your account including buying or selling short, short exempt, for the account of and at your own risk any part of or all the shares represented by Options endorsed by DriveWealth, LLC and for your account, or buying for your account and at your risk any put option, call option or other option as it may deem necessary to protect itself fully from loss or damage. You further agree that any and all expenses incurred by DriveWealth LLC or any of its affiliates in connection with the foregoing will be reimbursed to DriveWealth, LLC by you.
5. The foregoing provisions shall apply to all put options, call options or other options which DriveWealth, LLC may have previously purchased, sold, executed, handled, endorsed or carried for your account and shall also apply to all put options, call options or other options which DriveWealth, LLC may hereafter purchase, sell, handle, endorse or carry for your account and shall inure to the benefit of DriveWealth, LLC as now or hereafter constituted.
6. Closing Rights Positions Prior to Expiration: Prior to the start of the last trading day before expiration, Customer agrees to close out any long (or short) option position or other rights position (including but not limited to equity options and ETF options) that Customer holds for which Customer has insufficient equity, or may have insufficient equity at expiration,
to exercise (or be assigned on) such position and to then carry the resulting underlying position in Customer’s account. Customer acknowledges that approaching expiration with long or short options for which Customer does not or may not have sufficient equity to hold the underlying position puts the Customer and DriveWealth, LLC at serious risk (including the risk of market movements in the underlying product between expiration and the next opening of the market in the product). If DriveWealth, LLC in its sole discretion determines that Customer has or may have insufficient equity to take the underlying position in Customer’s account upon expiration of an option position, DriveWealth, LLC has the right, but not the obligation, to: (i) liquidate some or all of the options or rights position prior to expiration; (ii) lapse some or all of the options (i.e., instruct that they not be exercised), even if in-the-money at expiration; and/or (iii) allow some or all of the options to be exercised or assigned and then liquidate the resulting position. Customer shall have no claim for damages or lost profits resulting from DriveWealth, LLC taking or not taking any of these actions.
7. Customers who wish to exercise an option on a particular trading day acknowledge that they must provide specific, written instructions to DriveWealth LLC using the procedure specified on the DriveWealth LLC website before the Close Out Deadline specified. Customer further acknowledges that, absent receipt of such instructions, DriveWealth, LLC has no obligation to exercise Customer's option on any given trading day or prior to the expiration of the option. Customer acknowledges that the OCC will automatically exercise any long equity option held by a Customer that is in-the-money by $.01 or more at expiration, absent specific instructions to the contrary provided by Customer to DriveWealth, LLC using the procedures specified on the DriveWealth, LLC website.
8. Customer acknowledges that you have received and carefully read the Disclosure Regarding DriveWealth, LLC Procedures for Allocating Equity Option Notices Assigned by the OCC. Drivewealth, LLC is required by the Option Exchanges to advise you of the method we use in the allocation of exercise notices. Accordingly, we are advising you that we use the random method of allocation. Under this method exercise assignment notices for option contracts are randomly allocated among customer short positions. A more detailed description of our random allocation procedure is available upon request.
9. DriveWealth, LLC shall not be liable for loss caused directly or indirectly by government restrictions, exchange or market rulings, war, strikes or other conditions beyond its control.
10. This Agreement contains a pre-dispute arbitration clause. By signing an arbitration agreement the parties agree as follows: (a) All parties to this Agreement are giving up the right to sue each other in court, including the right to a trial by jury, except as provided by the rules of the arbitration forum in which a claim is filed; (b) Arbitration awards are generally final and binding; a party’s ability to have a court reverse or modify an arbitration award is very limited; (c) The ability of the parties to obtain documents, witness statements and other discovery is generally more limited in arbitration than in court proceedings; (d) The arbitrators do not have to explain the reason(s) for their award unless, in an eligible case, a joint request for an explained decision has been submitted by all parties to the panel at least 20 days prior to the first scheduled hearing date; (e) The panel of arbitrators will typically include a minority of arbitrators who were or are affiliated with the securities industry; (f) The rules of some arbitration forums may impose time limits for bringing a claim in arbitration. In some cases, a claim that is ineligible for arbitration may be brought in court; (g) The rules of the arbitration forum in which the claim is filed, and any amendments thereto, shall be incorporated into this Agreement; and (h) No person will bring a putative or certified class action to arbitration, nor seek to enforce any pre-dispute arbitration agreement against any person who has initiated in court a putative class action; or who is a member of a putative class who has not opted out of the class with respect to any claims encompassed by the putative class action until:
(a) the class certification is denied; (b) the class is decertified; or (c) the client is excluded from the class by the court. Such forbearance to enforce an agreement to arbitrate will not constitute a waiver of any rights under this Agreement except to the extent stated herein. Subject to the preceding disclosures, you agree that any and all controversies which may arise between you and DriveWealth and its Affiliates concerning the Account, any Transaction or the construction, performance or breach of this or any other agreement between you and DriveWealth, whether entered into prior, on or subsequent to the date hereof, shall be determined by arbitration. Any arbitration under this Agreement shall be determined before FINRA Dispute Resolution, Inc. under the provisions of the Code of Arbitration of FINRA, or an exchange of which DriveWealth is a member in accordance with the rules of that particular regulatory agency then in effect. Arbitration must be initiated by service upon the other party of a written demand for arbitration or notice of intention to arbitrate. Judgment, upon any award rendered by the arbitrator, may be entered in any court having jurisdiction.
11. If DriveWealth, LLC carries an account for you as clearing broker by arrangement with your broker DriveLoyalty LLC, then, unless DriveWealth, LLC receives a written notice to the contrary from you, DriveWealth, LLC shall accept from DriveLoyalty, without any inquiry or investigation, (i) orders for the purchase or sale of securities and other property for your account. You understand and agree that DriveWealth, LLC shall have no responsibility or liability to you for any acts or omissions of DriveLoyalty, its officers, employees or agents. DriveLoyalty has authorized DriveWealth, LLC to enter into this agreement with you on its behalf, and the terms and conditions hereof, including the pre- dispute arbitration provision, shall be applicable to all matters between you and DriveWealth, LLC.
12. You agree that this agreement and all transactions, whether DriveWealth, LLC is acting as broker or principal, shall be governed by the laws of the State of New Jersey and subject to the constitution, rules, customs and usages of the OCC and of all Exchanges and other self regulatory organizations upon which options are traded for your account, including rules of such Exchanges and the OCC relating to position and exercise limits as described in the publications or amendments thereto, referred to in paragraph 9 above.
13. In addition to the terms and conditions hereto, the Brokerage Account Form and Options Agreement will be subject to all of the terms and conditions of all other agreements entered into by DriveWealth, LLC and you relating to the purchase and sale of securities andoptions except to the extent that such other agreements are contrary to or inconsistent with this agreement. Those agreements are incorporated herein by reference and are a part of this agreement.
14. You have read the foregoing Brokerage Account Form and confirm that the information contained therein, especially those items concerning income, net worth, and investment objectives is accurate unless corrected and initialed.
15. THIS AGREEMENT CONTAINS A PRE-DISPUTE ARBITRATION CLAUSE.
16. YOU HEREBY CONFIRM THAT YOU HAVE READ THE PROVISIONS HEREIN AND UNDERSTAND THE CONTENTS HEREOF.
PLEASE RETAIN A DUPLICATE COPY OF THIS ENTIRE AGREEMENT FOR YOUR RECORDS.