Rev. Rul. 68-151

In Revenue Ruling 58-234, C.B. 1958-1, 279, which relates to the treatment of a premium received by the writer for granting a `put' and `call' option, the reference to the signature of the writer in the second sentence of the last paragraph (beginning at the bottom of page 282) of that Revenue Ruling should have referred to the signature of the dealer . The paragraph is clarified to reflect the absence of the writer's signature on the option form as follows:

Certain `put' and `call' corporate stock option contract forms now extensively used provide for `endorsement' on the reverse side thereof by a member of the New York Stock Exchange, and for exercising such options by delivery of the stock involved in a `put' option to such endorser, or by call on such endorser for the stock involved in a `call' option, instead of by delivery to, or by call on, the option writer (issuer or optioner) himself. Also, in such forms, directly above the line provided for the signature of the dealer , it is stated, `The undersigned acts as intermediary only, without obligation other than to obtain a New York Stock Exchange firm as Endorser.' Although the writer's signature does not appear on the option form , such endorser-firms require the writers of such `put' options to deposit with them, for payment to the optionees in the event of exercise, cash in the amount of the option price, and require the writers of such `call' options to so deposit, for delivery to the optionees in the event of exercise, the stock involved. Thus, the writer of such `put' or `call' options is actually a real optionor (and neither dealer nor broker), and the endorser-firm is his trustee-agent and surety (and not the optionor), with respect to them. Revenue Ruling 58-234 is clarified.