meeting and chosen not to object to dissemination of that response. A call or put option is at-the-money if the stock price and the exercise price are the same (or close). Since the option will not be exercised unless it is in-the-money, the payoff for a call option is max(SK 0displaystyle max left(S-K 0right also written as (SK) displaystyle (S-K) where (x)0 x 0x x0displaystyle (x 0 x 0x xgeq 0 A put option. Similarly, a combination of a freestanding written call (put) option and an embedded (non-transferable) purchased put (call) option that have the same terms and same underlying and that are entered into contemporaneously with different counterparties at inception should be considered. For the purposes of this question, in all cases, the purchased and written options have the same terms (strike price, notional amount, and exercise date) and the same underlying, and neither of the two options is required to be exercised. That result is expected by both the hybrid instruments issuer and investor regardless of whether the embedded feature that triggers the redemption is in the form of two separate options or a single forward contract. A combination of a freestanding purchased call (put) option and a freestanding or embedded (nontransferable) written put (call) option that have the same terms and same underlying and that are entered into contemporaneously with the same counterparty at inception should. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. Options as a Strategic Investment (4th.). In addition, consistent with the conclusion in Statement 133 Implementation Issue. A freestanding purchased call (put) option and a freestanding or embedded (nontransferable) written put (call) option that are executed contemporaneously with different counterparties at inception? Paragraph references: 12, 18, 20, 21, date cleared by Board: May 17, 2000, date revision posted to website: June 10, 2003. More specifically, it is the difference between the strike price of the option and the current trading price of its underlying security. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (Revised May 27, 2003 question, should the combinations of purchased and written options described below be considered for accounting purposes as two separate option contracts. A freestanding purchased call (put) option and a freestanding or embedded (nontransferable) written put (call) option that are executed contemporaneously with the same counterparty at inception but where the purchased option may be transferred? S ) above the strike price ( K ). A call option is in-the-money if the strike price is below the market price of the underlying stock.