Letter of Guarantee


Also found in: Acronyms.

Letter of Guarantee

A letter from a bank to a brokerage firm which states that a customer (who has written a call option) does indeed own the underlying stock and the bank will guarantee delivery if the call is assigned. Thus the call can be considered covered. Not all brokerage firms accept letters of guarantee. Also: letter issued to Option Clearing Corporation by member firms covering a guarantee of any trades made by one of its customers, (a trader or broker on the exchange floor).

Letter of Guarantee

In call options, a guarantee of delivery of securities made by a bank to a brokerage on behalf of the bank's client. When an investor is writing a call option and does not have the underlying asset in his/her brokerage account, the brokerage may require a letter of guarantee in order to eliminate the risk that the investor will not deliver the securities should the call be exercised.

letter of guarantee

A letter from a bank stating that a customer owns a particular security and that the bank will guarantee delivery of the security. A letter of guarantee is used by an investor who is writing call options when the underlying stock is not in his or her brokerage account.
Mentioned in ?
References in periodicals archive ?
Deposits and Guarantees required: - Participation Letter of Guarantee worth 20 808 euros when supply and two (2) species.
If you sell your car, you have to go to court to make a letter of guarantee for anyone who buys that car later on, and this may happen several times," he complained.
Letter of guarantee taken from state banks would be enough for Turkish investors to undertake projects in Libya, Caglayan said.
Participation Letter of Guarantee shall be submitted by the tenderer electronically in pdf format and presented by him on paper (original) within three (3) working days following the electronic submission, as set out in Article 8 hereof.
Also in case of a tender only one spare team, contestants must submit a Participation Letter of Guarantee (EFA) an amount equal to EUR 3.
The letter of guarantee initial power time set at eight (8) months from the date of opening of tenders.
Also in case of a tender of a single species contestants must submit a Participation Letter of Guarantee (HRC) an amount equal to at least EUR 1 940.
Alternatively, Letters of Guarantee issued in a language other than Greek or English, accompanied by an official translation in the Greek or English language, issued by a competent authority in the home country of the Bidder or by the Ministry of Foreign Affairs or the Greek Consulate in the country where the above Letter of Guarantee issued.
For the release of the bank guarantee for good performance, the supplier must submit a letter of guarantee proper operation of the system equal to 3% of the contract price excluding VAT.
Participation Letter of Guarantee will be put in the folder with the technical data.
Deposits and Guarantees required: The offer of the participant must necessarily disqualified and be accompanied by a Participation Letter of Guarantee, which must be issued in favor of, separately for each subgroup Species for which tender is submitted.
For participation in the tender requiring the submission of a letter of guarantee for participation of the participant, the amount of which amounts to 2% of total budgeted expenditures net of VAT of the item or items for which the participant bid.