Rule 10b-6: Options Trading by Participants in a Distribution

After briefly discussing the history of options trading, this Note argues that where participants in a distribution trade options, the potential for abuse is sufficient to warrant regulation of this activity. It then evaluates existing statutes and SEC rules that seek to prevent similar abuses and concludes that language in some of these provisions — particularly rule 10b-6 — can be construed to prohibit participants in a distribution from engaging in certain put and call transactions that might manipulate the price of the security being distributed.