CBOE To Introduce Mini-SPX Options With PM Settlement On November 5
Benefits also include ease of cash settlement and certainty of European exercise
CHICAGO, Oct. 29, 2013 /PRNewswire/ — Chicago Board Options Exchange, Incorporated (CBOE(®)) announced today that the Exchange will list a Mini-SPX Index option (options symbol: XSP) contract with a new PM-settlement feature beginning on Tuesday, November 5.
CBOE’s Mini-SPX Index options are one-tenth the value of the S&P 500(®) Index options (SPX), which are based on the premier benchmark of the broader U.S. market.
The PM-settlement is preferred by many investors, including institutions that have end-of-day reporting requirements. PM-settlement, also used for single-stock and ETF options, allows investors to trade in and out of positions easily on settlement day.
Unlike Standard & Poor’s Depositary Receipt (SPY) options and other ETF options, Mini-SPX Index options will be cash-settled and feature European-style exercise. European exercise eliminates the risk of early assignment, with potential loss of dividends.
Potential users of XSP include institutions and individuals seeking to gain exposure to the broad U.S. stock market with a manageably sized contract, while gaining the flexibility of a PM-settlement, the ease of cash settlement and the certainty of European exercise.
Bank of America Merrill Lynch will serve as the Designated Primary Market Maker (DPM) for XSP options.
CBOE’s current AM-settled Mini-SPX contract will be phased out beginning with the launch of the new PM-settled Mini-SPX contract.
For more information on XSP options, see http://www.cboe.com/XSP.
CBOE, the largest U.S. options exchange and creator of listed options, continues to set the bar for options and volatility trading through product innovation, trading technology and investor education. CBOE Holdings offers equity, index and ETP options, including proprietary products, such as S&P 500 options (SPX), the most active U.S. index option, and options and futures on the CBOE Volatility Index (the VIX Index). Other products engineered by CBOE include equity options, security index options, LEAPS options, FLEX options, and benchmark products such as the CBOE S&P BuyWrite Index (BXM). CBOE Holdings is home to the world-renowned Options Institute and www.cboe.com, the go-to place for options and volatility trading resources.
CBOE(®), Chicago Board Options Exchange(®), FLEX(®), LEAPS(®), CBOE Volatility Index(®) and VIX(®) are registered trademarks, and BuyWrite(SM), BXM(SM), Execute Success(SM), SPX(SM), The Options Institute(SM) and XSP(SM) are service marks of Chicago Board Options Exchange, Incorporated (CBOE). Standard & Poor’s(®), S&P(®) and S&P 500(®) are registered trademarks of Standard & Poor’s Financial Services, LLC and have been licensed for use by CBOE and CFE.