The Options Industry Council Announces Updated "Taxes & Investing" Pamphlet, Detailing New Tax Legislation and Their Effect on Options

Chicago—March 13, 2006

The Options Industry Council (OIC) announced today an addendum to its Taxes & Investing pamphlet is now available on the OIC web site at Taxes & Investing. The new addendum, written by Richard J. Shapiro, Tax Principal, Ernst & Young LLP, explains the impact of new federal income tax laws, through January 31, 2006, effecting options investments.

The addendum includes a description of the newly introduced Physical Settlement Rule. This new rule states that the physical settlement of a straddle position (e.g. an options spread strategy) established after October 21, 2004, that if terminated would result in a realization of loss, is treated as a two-step transaction for purposes of applying the anti-straddle rules. First, the position is treated as having been terminated for its fair market value immediately before the settlement. Then, the property (e.g., stock) used to physically settle the position is treated as having been sold at fair market value.

The Taxes & Investing pamphlet summarizes the basic rules governing the federal income taxation of certain investments by individuals who are citizens or residents of the United States and who dispose of an investment in a taxable transaction. The pamphlet is revised annually with details on newly introduced federal income tax laws that affect options.

The addendum serves as a temporary update to OIC's Taxes & Investing pamphlet.

About OIC

OIC is a non-profit association funded by the American Stock Exchange, Boston Options Exchange, Chicago Board Options Exchange, International Securities Exchange, Pacific Exchange, Philadelphia Stock Exchange and The Options Clearing Corporation. OIC's resources include: The Options Industry Services call center at 1-888-OPTIONS, an educational Web site at www.888options.com, evening seminars throughout the continental United States and Canada, instructional videos and educational literature and software.

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