Re: Option Language

Greg:

It looks like Melba sent you an example of a put. There is nowhere else on
the website to explain the different calculations so they use the identical
Long Description except for that one clause to differentiate between puts and
calls. So far there have not been any collars, straddles, etc. offered.

On the second change, it looked to me like the preceding sentence already
covers the treatment of holidays:

...at the end of such day (normally being 4:05 p.m. (MPT)) on EnronOnline (or
for Saturdays, Sundays and statutory holidays, at the end of the day on the
preceding business day)...

which makes the deleted language redundant.

Greg Johnston
03/12/2001 11:30 AM

To: Melba Lozano/HOU/ECT@ECT
cc: Dianne Seib/CAL/ECT@ECT, Lon Draper/CAL/ECT@ECT, Mark Taylor/HOU/ECT@ECT
Subject: Re: Option Language

Melba, I have reviewed the proposed changes and I do not believe that they
should be made. The change to the calculation of the Cash Settlement Amount
to specify it is the Strike Price minus the Index doesn't work unless the
option is a put. We want this long description to work for all options
(puts, calls, collars, etc.) and for each of those the calculation of the
Cash Settlement Amount is different. That is the reason that we originally
put in the generic language that the Cash Settlement Amount is "the greater
of zero or the amount calculated as set forth on the Website", such that the
actual calculation mechanism for the Cash Settlement Amount will be set forth
in each specific product. Therefore, I would suggest we change it back to
the original wording.

On the second change, I know that the wording that was removed is important
to our traders. If the description is silent on holiday pricing (which will
be the case if we make the suggested change), I am not sure as to what the
default is. We need to make sure that the default where the pricing for
holidays is not specified is exactly the same as the wording removed,
otherwise the wording removed needs to be put back in. I am also not clear
on why we would remove the wording in the first place and create any
uncertainty as to holiday pricing.

Thanks
Greg

To: Greg Johnston/CAL/ECT@ECT
cc: Dianne Seib/CAL/ECT@ECT, Lon Draper/CAL/ECT@ECT
Subject: Option Language

Greg,

Attached please find the language for the Option products. I need final
approval from you. Changes were suggested by Mark Taylor.

Thansk,

Melba