Commentary on Sections Overview Chapter 2: Contracts to which this Part applies Section 580: “Option”
1526.This section defines the term “option”. It is based on paragraph 12(1), (8) and (10) of Schedule 26 to FA 2002.
1527.Subject to the non-exhaustive definition in subsection (1) and the limitation in subsection (2) (itself limited by subsection (3)), the word takes its ordinary meaning. “Warrant”, in subsection (1), is defined in section 710 (other definitions).
1528.The limitation in subsection (2) excludes cash-settled options from the meaning of “option”. Contracts so excluded fall within the definition of contracts for differences and are therefore subject to the rules applying to relevant contracts generally and those applying specifically to contracts for differences.
1529.Subsection (4) lists a number of provisions that dispense with this limitation and so do not exclude cash-settled options from the meaning of “option” in that context.