Federal Register / Vol. 75, No. 206 / Tuesday, October 26, 2010 / Notices 65693 

11For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 

12 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release Nos. 59277 

(November 6, 2009), 74 FR 59277 (November 17, 

2009 (SR–NASDAQ–2009–099) (order approving); 

and 61736 (March 18, 2010), 75 FR 14229 (March 

24, 2010) (SR–NASDAQ–2010–038) (notice of filing 

and immediate effectiveness allowing concurrent 

listing of $3.50 and $4 strikes for classes that 

participate in both the $0.50 Strike Program and the 

$1 Strike Program). 

waiver of the operative delay is 

consistent with the protection of 

investors and the public interest 

because doing so will permit immediate 

correction of the Exchange’s error in 

their prior filing revising the terms of 

the $0.50 Strike Price Program. 

Therefore, the Commission designates 

the proposal operative upon filing.11

At any time within 60-days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–Phlx–2010–149 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–Phlx–2010–149. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street, NE., 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange. All comments received will 

be posted without change; the 

Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–Phlx– 

2010–149 and should be submitted on 

or before November 16, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–27003 Filed 10–25–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63135; File No. SR– 

NASDAQ–2010–131] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by the 

NASDAQ Stock Market, LLC To 

Expand the $0.50 Strike Price Program 

Date: October 20, 2010. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that, on October 

13, 2010, The NASDAQ Stock Market 

LLC (‘‘NASDAQ’’ or the ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘SEC’’ or ‘‘Commission’’) 

the proposed rule change as described 

in Items I and II below, which Items 

have been prepared by the Exchange. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The NASDAQ Stock Market LLC 

proposes to amend Chapter IV titled 

Securities Traded on NOM, Sec. 6 

(Series of Options Contracts Open for 

Trading), specifically the Exchange’s 

$.50 Strike Price Program (the ‘‘$.50 

Strike Program’’ or ‘‘Program’’) 3 to: (i) 

Expand the $.50 Strike Program for 

strike prices below $1.00; (ii) extend the 

$.50 Strike Program to strike prices that 

are $5.50 or less; (iii) extend the prices 

of the underlying security to at or below 

$5.00; and (iv) extend the number of 

options classes overlying 20 individual 

stocks. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http:// 

www.nasdaq.cchwallstreet.com, at the 

principal office of the Exchange, on the 

Commission’s Web site at http:// 

www.sec.gov, and at the Commission’s 

Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change. The text of 

these statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of this proposed rule 

change is to modify Supplementary 

Material of Chapter IV, Section 6 at .05 

to expand the $.50 Strike Program in 

order to provide investors with 

opportunities and strategies to minimize 

losses associated with owning a stock 

declining in price. 

The Exchange is proposing to 

establish strike price intervals of $.50, 

beginning at $.50 for certain options 

classes where the strike price is $5.50 or 

less and whose underlying security 

closed at or below $5.00 in its primary 

market on the previous trading day and 

which have national average daily 

volume that equals or exceeds 1,000 

contracts per day as determined by The 

Options Clearing Corporation (‘‘OCC’’) 

during the preceding three calendar 

months. The Exchange also proposes to 

limit the listing of $.50 strike prices to 


emcdonald on DSK2BSOYB1PROD with NOTICES
65694 Federal Register / Vol. 75, No. 206 / Tuesday, October 26, 2010 / Notices 

4See Supplementary Material of Chapter IV, 

Section 6 at 02(b) referring to the $1 Strike Program. 

5SIRI was trading at $0.9678 on July 13, 2010. 6This was the price for C on July 14, 2010. 

7 15 U.S.C. 78f(b). 

8 15 U.S.C. 78f(b)(5). 

options classes overlying no more than 

20 individual stocks as specifically 

designated by the Exchange. 

Currently, Supplementary Material of 

Chapter IV, Section 6 at .05 permits 

strike price intervals of $.50 or greater 

beginning at $1.00 where the strike 

price is $3.50 or less, but only for option 

classes whose underlying security 

closed at or below $3.00 in its primary 

market on the previous trading day and 

which have national average daily 

volume that equals or exceeds 1,000 

contracts per day as determined by The 

Options Clearing Corporation during the 

preceding three calendar months. 

Further, the listing of $.50 strike prices 

is limited to options classes overlying 

no more than 5 individual stocks as 

specifically designated by the Exchange. 

The Exchange is currently restricted 

from listing series with $1 intervals 

within $0.50 of an existing strike price 

in the same series, except that strike 

prices of $2, $3, and $4 shall be 

permitted within $0.50 of an existing 

strike price for classes also selected to 

participate in the $0.50 Strike Program.4

The number of $.50 strike options 

traded on the Exchange has continued 

to increase since the inception of the 

Program. There are now approximately 

19 of the $.50 strike price option classes 

listed, and traded, across all options 

exchanges including NOM; 1 of which 

is a class chosen by NOM for the $0.50 

Strike Program. The proposal would 

expand $.50 strike offerings to market 

participants, such as traders and retail 

investors, and thereby enhance their 

ability to tailor investing and hedging 

strategies and opportunities in a volatile 

market place. 

By way of example, if an investor 

wants to invest in 5,000 shares of Sirius 

Satellite (‘‘SIRI’’) at $ 0.9678,5 the only 

choice the investor would have today 

would be to buy out-of–the-money calls, 

at the $1.00 strike, or to invest in the 

underlying stock with a total outlay of 

$.96 per share or $4,800. However, if a 

$.50 strike series were available, an 

investor may be able to invest in 5,000 

shares by purchasing an exercisable inthe-money $.50 strike call option. It is 

reasonable to assume that with SIRI 

trading at $.96, the $.50 strike call 

option would trade at an estimated price 

of $.46 to $.48 under normal 

circumstances. This would allow the 

investor to manage 5,000 shares with 

the same upside potential return for a 

cost of only $2,350 (assuming $.47 as a 

call price). 

Similarly, if an investor wanted to 

spend $4,800 for 5,000 shares of SIRI, a 

$.50 put option that would trade for 

$.01 to $.05 would provide protection 

against a declining stock price in the 

event that SIRI dropped below $.50 per 

share. In a down market, where high 

volume widely held shares drop below 

$1.00, investors deserve the opportunity 

to hedge downside risk in the same 

manner as investors have with stocks 

greater than $1.00. 

Increasing the threshold from $3.00 to 

$5.00 and expanding the number of 

$0.50 strikes available for stocks under 

$5.00 further aids investors by offering 

opportunities to manage risk and 

execute a variety of option strategies to 

improve returns. For example, today an 

investor can enhance their yield by 

selling an out-of-the-money call. Using 

an example of an investor who wants to 

hedge Citigroup (‘‘C’’) which is trading at 

$4.24,6 that investor would be able to 

choose the $4.50 strike which is 6% outof-the-money or they would be able to 

choose the $5.00 strike which is 17.92% 

out-of-the-money, under this proposal. 

Today, this investor only has the latter 

choice. Beyond that, this investor today 

may choose the $6.00 strike which is 

41% out-of-the-money and offers 

significantly less premium. Pursuant to 

this proposal if this investor had a 

choice to hedge with a $5.50 strike 

option, the investor would have the 

opportunity to sell the option at only 

29% out-of-the-money and would 

improve their return by gaining more 

premium, while also benefitting from 

29% of upside return in the underlying 

equity. 

By increasing the number of securities 

from 5 individual stocks to 20 

individual stocks would allow the 

Exchange to offer investors additional 

opportunities to use the $0.50 Strike 

Program. The Exchange notes that $0.50 

strikes have had no impact on capacity. 

Further, the Exchange has observed the 

popularity of $0.50 strikes. The open 

interest in the $2.50 August strike series 

for Synovus Financial Corp. (‘‘SNV’’), 

which closed at $2.71 on July 13, 2010, 

was 12,743 options; whereas open 

interest in the $2 and $3 August strike 

series was a combined 318 options. The 

open interest in the August $1.50 strike 

series for Ambac Financial Group, Inc. 

(‘‘ABK’’), which closed at $0.7490 on 

July 13, 2010, was 15,879 options 

compared to 8,174 options for the $2 

strike series. The August $2.50 strike 

series had open interest of 22,280 

options, also more than the traditional 

$2 strike series. 

By expanding the $.50 Strike Program 

investors would be able to better 

enhance returns and manage risk by 

providing investors with significantly 

greater flexibility in the trading of 

equity options that overlie lower price 

stocks by allowing investors to establish 

equity options positions that are better 

tailored to meet their investment, 

trading and risk 

The Exchange also proposes making a 

corresponding amendment to 

Supplementary Material of Chapter IV, 

Section 6 at 02(b) to add $5 and $6 to 

$1 Strike Program language that 

addresses listing series with $1 intervals 

within $0.50 of an existing strike price 

in the same series. Currently, and to 

account for the overlap with the $.50 

Strike Program, the following series are 

excluded from this prohibition: Strike 

prices of $2, $3, and $4. The Exchange 

proposes to add $5 and $6 to that list 

to account for the proposal to expand 

the $.50 Strike Program to a strike price 

of $5.50. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 7 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 8

in particular, in that it is designed to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general to protect 

investors and the public interest. The 

Exchange believes that amending the 

current $.50 Strike Program will result 

in a continuing benefit to investors by 

giving them more flexibility to closely 

tailor their investment decisions in a 

greater number of securities. Investors 

would be provided with an opportunity 

to minimize losses associated with 

declining stock prices which do not 

exist today. With the increase in active, 

low-prices securities, the Exchange 

believes that amending the $.50 Strike 

Program to allow a $.50 strike interval 

below $1 for strike prices of $5.50 or 

less is necessary to provide investor 

additional opportunity to minimize and 

manage risk. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 


emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 206 / Tuesday, October 26, 2010 / Notices 65695 

9 15 U.S.C. 78s(b)(3)(A). 

10 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires the Exchange to give the 

Commission written notice of the Exchange’s intent 

to file the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has satisfied this requirement. 

11See Securities Exchange Act Release No. 63132 

(October 19, 2010) (SR–Phlx–2010–118) (order 

approving expansion of $0.50 Strike Price Program). 

12For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 13 17 CFR 200.30–3(a)(12). 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received. 

III. Date of Effectiveness of the Proposed 

Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not significantly affect the 

protection of investors or the public 

interest, does not impose any significant 

burden on competition, and, by its 

terms, does not become operative for 30 

days from the date on which it was 

filed, or such shorter time as the 

Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 9 and Rule 19b– 

4(f)(6) thereunder.10

The Exchange has requested that the 

Commission waive the 30-day operative 

delay. The Commission believes that 

waiver of the operative delay is 

consistent with the protection of 

investors and the public interest 

because the proposal is substantially 

similar to that of another exchange that 

has been approved by the 

Commission.11 Therefore, the 

Commission designates the proposal 

operative upon filing.12

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–NASDAQ–2010–131 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NASDAQ–2010–131. This 

file number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street, NE., 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange. All comments received will 

be posted without change; the 

Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR– 

NASDAQ–2010–131 and should be 

submitted on or before November 16, 

2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–27005 Filed 10–25–10; 8:45 am] 

BILLING CODE 8011–01–P 

SMALL BUSINESS ADMINISTRATION 

[Disaster Declaration #12349 and #12350] 

Minnesota Disaster Number MN–00028 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Amendment 1. 

SUMMARY: This is an amendment of the 

Presidential declaration of a major 

disaster for Public Assistance Only for 

the State of Minnesota (FEMA–1941– 

DR), dated 10/13/2010. 

Incident: Severe Storms and Flooding. 

Incident Period: 09/22/2010 through 

10/14/2010. 

DATES: Effective Date: 10/14/2010. 

Physical Loan Application Deadline 

Date: 12/13/2010. 

Economic Injury (EIDL) Loan 

Application Deadline Date: 07/13/2011. 

ADDRESSES: Submit completed loan 

applications to: U.S. Small Business 

Administration, Processing and 

Disbursement Center, 14925 Kingsport 

Road, Fort Worth, TX 76155. 

FOR FURTHER INFORMATION CONTACT: A. 

Escobar, Office of Disaster Assistance, 

U.S. Small Business Administration, 

409 3rd Street, SW., Suite 6050, 

Washington, DC 20416. 

SUPPLEMENTARY INFORMATION: The notice 

of the President’s major disaster 

declaration for Private Non-Profit 

organizations in the State of 

MINNESOTA, dated 10/13/2010, is 

hereby amended to establish the 

incident period for this disaster as 

beginning 09/22/2010 and continuing 

through 10/14/2010. 

All other information in the original 

declaration remains unchanged. 

(Catalog of Federal Domestic Assistance 

Numbers 59002 and 59008) 

Cynthia G. Pitts, 

Acting Associate Administrator for Disaster 

Assistance. 

[FR Doc. 2010–27082 Filed 10–25–10; 8:45 am] 

BILLING CODE 8025–01–P 

SMALL BUSINESS ADMINISTRATION 

[Disaster Declaration # 12353 and # 12354] 

North Carolina Disaster Number NC– 

00030 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Amendment 1. 

SUMMARY: This is an amendment of the 

Presidential declaration of a major 

disaster for the State of North Carolina 

(FEMA–1942–DR), dated 10/14/2010. 


emcdonald on DSK2BSOYB1PROD with NOTICES