June 18, 1992
Analysis Put (Put Option)
An option to sell a specified commodity at a specified price and time. This is not a qualified investment as it is not a right to acquire anything.
Call Option
An option to buy a fixed quantity of a commodity at a fixed price. This qualifies per 4900(1)(e) if underlying property qualifies.
Index option
The value is tied to an exchange index. Exercising the option gives the holder the right to cash, not a right to the underlying shares on which its value is based. Per Wayne Harding's letter we have taken the position that such indexes, whether put or call, generally are not qualified investments because they do not entitle the holder to anything at the time of purchase since at that time their value would be nil.