Recovery of losses from option transactions – option transactions via banks may be non-binding

Options trading is one of the most dangerous investments as it can cause huge losses even without an investment. The premium of EUR 400.00 for a standstill transaction can suddenly turn into a loss of EUR 40,000.00. In connection with consumers, however, the sometimes extremely complex bets are often not made binding after they have been checked by the Witt Rechtsanwälte. Private investors therefore often have the opportunity to receive reimbursement for the resulting damage.

1. Stock options, futures, index options, etc. as bets on unknown rules

The design options for option transactions or. forward transactions are ultimately infinite as you can bet on the performance of any stock or market over many time frames – blue chips as well as pork. At its core, any purchase or sale of an option is based on the expectation of how the so-called Underlying developed up to a key date at the end of the semester.

The basic principle therefore seems simple and clear at first glance, but in many cases this impression and the true content of the services offered are misleading bet is almost never fully apparent to investors. In many option transactions, the valuation of the option is by no means solely based on the price of the underlying asset, but also on other factors that are much harder to control.

One of these factors is often the so-called volatility or the susceptibility to price fluctuations. This is explained using a somewhat simplified example. If, for example, an option transaction aims to ensure that the price of a particular share does not rise above EUR 70.00 on the agreed key date, the valuation of the option will be affected by whether the price of the corresponding share remains constant during the maturity of the 65.00 euro option moves or fluctuates constantly between 60.00 euro and 65.00 euro. Although the distance to the threshold of EUR 70.00 is also not smaller in the second case, it is exchange rate fluctuations on the value of the option. The increased volatility also indicates a higher risk of exceeding the threshold.

The general level of interest rates can also have an impact on the valuation of options.

It has already happened in many cases no information on such factors and their specific impact on the special option transaction, and if these factors are priced not only through the market but, as is often the case, through formulaic calculations, these fundamentals must also be transparently agreed upon, at least when contracts are concluded with consumers.

2. Capital investments that are opaque and incomprehensible to consumers

In many forms, option transactions and futures transactions make sense at best to institutional or professional investors, but not to them because of their complexity and risk. private investors and private investors. Then two completely different worlds collide – the highly specialized options and futures market and the opportunities for normal investors. So let’s go futures exchange Eurex Deutschland only institutional clients use the trading platform for standardized futures contracts such as options or futures. This important futures exchange is not set up to deal with consumers at all. Unlike shares, private investors need a bank or a broker to be able to carry out such options transactions indirectly via Eurex Deutschland.

In fact, many banks and savings banks are willing to help their customers do business of this kind, even though it should be obvious that the products in question are completely unsuitable for them.

It is already clear from Terms or special conditions for futures transactions, which is used by the relevant banks and savings banks mostly in a largely standardized form. Especially Trading and clearing conditions as well Exchange rules of Eurex Deutschland in the relationship between the bank and the customer. However, these conditions and the exchange regulations are aimed at dealing with professional investors and are incomprehensible to consumers. One therefore tries to follow the rules of a futures exchange, which actually excludes private investors, by taking a detour via Terms and Conditions of the banks and savings banks apply to private customers. In this form, this is not possible for consumers and confirms how little the affected products suit this group of people.

The extreme lack of transparency already makes it impossible for consumers to knowingly participate in such transactions and control them over their term.

Apart from the fact that in the relationship between the credit institution and the customer it is often not possible to effectively agree on the essential basis for the transactions in question, in this area there is also very often no agreement on the obligations that follow from and in connection with a particular option transaction . The rules to which these transactions should be subject are usually described only in a rudimentary way, however one transparent agreement would be required.

3. Collateral and margin calls as an unmanageable risk

The widespread lack of transparency in many option trades is reflected in the agreements on collateral or so. margin call Party. This primarily affects options and futures trades, where the investor as so-called author actions, but also other option trades in foreign currency.

If there is a risk of having to make a so-called additional payment for corresponding options transactions, the bank or broker requires the deposit of a corresponding collateral – usually as credit on a so-called margin account. If the valuation of the affected option transaction changes negatively during the term, the collateral may appear to be too low and the request for subsequent collateral, the margin call, is made. If the security cannot be increased, option trades are carried out immediately settled down. This is often a significant Loss bound together.

With regard to collateral and any margin calls, however, there is usually a double problem for private investors. On the one hand, as described above, they regularly lack insight into the whole functionality of the affected options trade, so that you can neither assess the risk of further hedging nor follow the current development in this point. A margin call can therefore come as a surprise and at short notice.

On the other hand, in this case it is completely opaque how the subsequent backup is determined. This is only briefly stated in the terms and conditions of the banks and savings banks that for all orders to complete transactions with Eurex Deutschland, collateral must be provided at least in the amount calculated according to the Eurex Deutschland calculation method. To this, like this calculation method However, no agreement is entered into regarding general or specific option transactions. Consumers should therefore have to provide additional security when they are called.

This was the fate of many private investors because they could not or did not want to meet the surprising and incomprehensible additional requirements and therefore their option transactions with them high losses has been dissolved.

4. Lack of transparency leads to non-binding

According to Witt Rechtsanwälte’s assessment, due to the great lack of transparency in special circumstances or. Conditions for Futures Transactions by the banks and savings banks, on the basis of which no effective obligation can be created by the consumers.

This follows in particular from the established jurisprudence regarding EU Court of Justice (EFD) on the requirements for agreements on loans in foreign currency with consumers. Also loans in foreign currency mainly reflect speculation with regard to the development of the affected exchange rate, whereby their risk is generally much easier to understand than in many option transactions. But for the effectiveness of the corresponding obligation on the part of the consumer, the European Court of Justice requires a lot concrete and understandable presentation of the potential risks either in the contractual relationship itself or in parallel with it. This was last in judgments of September 8, 2022, file no C-80/21and from 17 May 2022 file number C-600/19 ua, very clearly confirmed.

this The requirements of the European Court of Justice the agreements on option deals between credit institutions and consumers generally do not come close to doing justice. In many cases, it is essentially a general explanation of the abstract risks of futures transactions, so that the so-called Future’s ability can be documented, but no concrete representation of the potential risks of the proposed options transaction – let alone its transparent agreement.

In many cases it can therefore be assumed that the option transactions in question could not be carried out with binding effect and that the losses or burdens that the banks have had. repaid Need to stay.

5. Victims should have their options checked

Consumers who, through appropriate option transactions, i.e. above all through Stock options, index options and other futures transactions, have suffered losses should be responsible for the affected transactions checked by a lawyer. Under the above conditions, it is possible to Damage not yet replaced.

According to the EC Court’s jurisprudence, it can generally be assumed that a limitation period of the repayment claim does not begin until the investor has become aware that the transaction in question is non-binding.

Witt Rechtsanwälte is happy to be with you research and consultancy in connection with losses from option trades.

Witt lawyers

Heidelberg Munich Oranienburg

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