This is the value, as at the relevant date, of uncovered, or naked, commodity (excluding gold) put options the entity purchased, as determined in accordance with relevant prudential standards.For the purposes of this item, option positions which are partially covered should be reported only to the extent of their uncovered amount.Uncovered, or naked, positions represent those positions which are not backed by underlying assets, and are generally entered into for speculative trading purposes.A bought, or purchased, put option is a put option that has been purchased by an entity. It provides the purchasing entity with the right but not the obligation to sell a specific amount of the underlying asset at a pre-agreed price, on or before a specific future date.A commodity contract is any contract that transfers the commodity price risk of an underlying commodity from one party to another. 

This item represents the capital charge. Refer to APS 116.

The simplified method may only be used by those ADIs that handle a limited range of purchased options.

The method for calculating the capital charge on an options position depends on whether the position is covered or naked. Option positions, which are partially covered, should be separated into a fully covered position and a naked position. For both covered and naked positions, if positions do not fall within the trading book (for example, options on certain foreign exchange or commodities positions), ADIs may use the book value rather than the market value.