Renewable option accounting and marketing system

• US 4,823,265 A
• Filed: 05/11/1987
• Issued: 04/18/1989
• Est. Priority Date: 05/11/1987
• Status: Expired due to Term

• Current Assignee: George E. Nelson
• Original Assignee: George E. Nelson
• Inventors: Nelson, George E.
• Primary Examiner(s): NOT, DEFINED
• Assistant Examiner(s): NOT, DEFINED
• Application Number:
  US07/048,629
• Time in Patent Office: 708 Days
• Field of Search: 364/408, 364/406
• US Class Current: 705/35
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

A system and method for processing transactions in renewable options in stocks or other securities. The system provides means for entry of customer data and renewable option transaction data, means for processing the data, and means for storing the data. Included in the transaction data is data regarding the criteria under which the renewable option investment will be renewed, as well as data indicating the renewal premium for renewing the renewable option, which may be a fixed amount or an amount based on additional data. Through this system, the renewable option may be renewed periodically for a fixed period, until a designated event occurs, or perpetually. Means for storing criteria under which the renewable options are exercised, sold, or allowed to expire, and for processing the exercise, sale, or expiration of such renewable options, are also disclosed. Also disclosed is a method for processing transactions in such renewable options.

Claims

1. An automated renewable option accounting and marketing system comprising:

first data storage means for storing data describing a holding in a renewable option in an underlying security;

second data storage means for storing criteria under which the renewable option will be renewed;

access means for accessing market and date data from which a determination can be made as to whether the renewal criteria has been satisfied; and

data processing means for processing said first data storage means data, said second data storage means data, and said market and date data such that the renewable option is renewed when the renewal criteria are satisfied.

2. The automated renewable option accounting and marketing system according to claim 1 wherein the first data storage means includes means for storing renewal premium data from which the renewal premium may be calculated;

and the data processing means includes means for determining the amount of renewal premium.

3. A method for accounting and marketing a renewable option transaction involving an underlying security comprising the steps of:

storing transaction data describing a transaction in renewable options for an underlying security including the number of renewable options purchased, a strike price of the renewable option, and renewal data from which to calculate a renewal premium of the renewable option on renewal;

storing market and date criteria under which the renewable options will be renewed;

accessing market and date data from which a determination can be made as to whether the renewal criteria have been satisfied;

processing the transaction data, the market and date criteria, and the market and date data to determine whether to renew the renewable option; and

processing the renewal data and market data to determine the renewal premium.

4. The method for accounting and marketing a renewable options transaction in accordance with claim 3 wherein the step of storing the market and date criteria includes storing criteria for indicating that the renewable option is not to be renewed after a selected date.

5. The method for accounting and marketing a renewable option transaction in accordance with claim 3 further comprising the steps of:

storing the market and date criteria under which the renewable options will be exercised; and

processing the transaction data, market and date data, and market and date criteria to determine whether the renewable option should be exercised.

6. The method for accounting and marketing of a renewable option transaction in accordance with claim 3 further comprising the steps of:

storing the market and date criteria under which the renewable options will be allowed to expire; and

processing the market and data criteria and market and dated data to determine whether the renewable option should be allowed to expire.

7. The method for accounting and marketing a renewable option transaction in accordance with claim 3 further comprises the steps of:

storing the market and date criteria under which the renewable options will be sold; and

processing the market and data criteria and market and date data to determine whether the renewable options should be sold.

8. The method for accounting and marketing a renewable option transaction in accordance with claim 3 wherein processing the renewal data and market data to determine the renewal premium includes the step of setting the renewal premium at an amount which is a function of the original premium of the renewable option under certain criteria.

9. The method for accounting and marketing a renewable option transaction in accordance with claim 3 wherein processing the renewal data and market data to determine the renewal premium includes the step of setting the renewal premium at an amount which is not a function of the original renewable option premium and is less than the original renewal option premium under certain criteria.

10. An automated renewable option accounting and marketing system for a transaction involving an underlying security comprising;

(a) terminal means for entry and display of data including customer data and renewable option transaction data including buy and sell data;

(b) programmed processor means for processing the data entered at the terminal means;

(c) first data communications means for providing data transfer between the terminal means and the programmed processor means;

(d) data storage means electrically interconnected to the programmed processor means for storing data including data entered at the terminal means, the data stored in the data storage means including individual customer data including customer name, address, and account identifier data and renewable option transaction data including transaction identifier data and renewable option premium data;

(e) means interconnected to the programmed processor means for providing the programmed processor means with date data and market data; and

(f) program means for processing the renewable option premium data, date data and market data to determine whether a renewal premium is due and the amount of the renewal premium due.

11. An automated renewable option accounting and marketing system in accordance with claim 10 further comprising:

processor means for automatically processing and confirming a renewal transaction of the renewable option, including the processing of the renewal premium and processing the customer account to reflect the renewal of the option.

12. An automated renewable option accounting and marketing system in accordance with claim 10 comprising:

processing means for renewing the renewable option by automatically processing a subsequent transaction in the renewable option, the renewal premium determinable as a function of the stored renewable option transaction data, data data, and market data;

said processing to occur before said renewable option expires.

13. A renewable option accounting and marketing system according to claim 12 wherein the processing means is further responsive to the renewable option premium data, date data, and market data such that the renewable option will prevent renewal after a fixed period of time.

14. A renewable option accounting and marketing system according to claim 10 wherein the program means includes means for renewing the option for the lifetime of the option owner.

15. A renewable option accounting and marketing system according to claim 10 wherein the program means includes means for renewing the option without any time limit.

16. A renewable option accounting and marketing system according to claim 10 further comprising processing means responsive to an exercise criteria for processing and confirming the exercise of the renewable option.

17. A renewable option accounting and marketing system according to claim 10 further comprising processing means responsive to sell criteria for processing the sale of the renewable option.

18. A renewable option accounting and marketing system according to claim 10 further comprising means responsive to expiration criteria for processing the expiration of the renewable option.

19. A renewable option accounting and marketing system according to claim 10 further comprising means for placing a request to complete a transaction in said renewable option including:

means for proposing terms of the renewable option transaction including renewable option strike price data and renewable option market price data;

means for transferring the proposed terms of the renewable option transaction request to a market database; and

means for responding to an acceptance of the request by processing and confirming the transaction according to the accepted transaction terms.

20. A renewable option accounting and marketing system according to claim 10 wherein the program means includes means for calculating a renewal premium which is a function of the market price of the underlying security at a time subsequent to the time of the initial investment transaction.

21. A renewable option accounting and marketing system according to claim 10 further comprising means for periodically providing customer account information including the number of renewable options held by the customer, said information including an identifier of the security underlying the renewable option, the strike price of each renewable option, the renewal date of each renewable option, and the next renewal premium of each renewable option.

22. A renewable option accounting and marketing system according to claim 10 further comprising means for periodically debiting customer accounts, billing customers for renewal premiums, and confirming renewal option transactions, renewals and expirations.

23. A renewable option accounting and marketing system according to claim 10 further comprising means for selecting a renewal period.

24. A renewal option accounting and marketing system according to claim 10 further comprising means for matching offers to buy renewable options with offers to sell renewable options to complete transactions in renewable options.

25. An automated renewable option accounting and marketing system comprising:

first processing means responsive to a customer information request for accessing customer account information;

second processing means responsive to a transaction request for accessing market data indicating the terms and availability of a transaction in a permanent option in an underlying security at a strike price;

third processing means for making said market data available to a user of the system;

first program means responsive to a transaction request by the user of the system for determining whether the customer account includes holdings adequate for the customer to write a requested number of renewable options at the strike price;

second program means responsive to said determination of the adequacy of the customer account holdings that such holdings are adequate for processing and confirming a transaction in said permanent option at a particular strike price and renewable option premium;

storage means for storing initial transaction data including said strike price, said initial renewable option premium, renewal data and the market price of said underlying security; and

fourth processing means for processing and monitoring renewal transactions and expirations of said renewable options.