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Letter of Guarantee

Definition: [crh] 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 Definition: EF="/?rd=guarantee">guarantee delivery if the call is assigned. Thus the call can be considered covered. Not all brokerage firms accept lettersDefinition: of guarantee. Also: letter issued to Option Clearing Corporation by member firms covering a guarantee of any trades made by one of its custoDefinition: mers, (a trader or broker on the exchange floor).

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