The Chicago Board Options Exchange (CBOE) and the CBOE Stock Exchange (CBSX) are now offering fully automated executions for combined option and stock trades through a single electronic platform.
This new functionality will enable the simultaneous execution of both the stock and option legs of any position trade in a one-to-one ratio all on the same electronic platform. This new automated feature will be especially advantageous for investors executing buy-write or married put hedging trades, but can be used for any trade that is combining different stock and option orders. Added benefits for traders include faster executions and the opportunity for price improvement.
“For options traders executing buy-write or other combined stock and option orders, this new automation creates greater efficiency in the overall execution process, says CBOE chairman and CEO William Brodsky. “Over the last five years, CBOE has been an industry leader in developing buy-write benchmarks and product offerings. Creating a means for the electronic execution of these types of trades is the natural extension of our efforts to elevate the strategys profile and will only serve to foster even greater awareness and use of CBOEs BuyWrite products.”
“CBSX is pleased to join with CBOE in offering investors the capability to automate their combined stock and option orders through a single electronic platform,” says David Harris, chief executive officer of the CBOE Stock Exchange. “We expect that customers will find tremendous advantage in executing their cross-product trades in a fully electronic trading environment.
The ability to pair stock and option orders together — in one transaction and on a single platform — not only creates obvious trading efficiencies, but also lowers the cost of multi-asset transactions. The automation of combined stock and option trades is an important step in our ongoing mission to create trading efficiencies between asset classes and to reduce the overall costs for investors.”
This new CBOE/CBSX technology electronically pairs a single option leg with a stock leg in a one-to-one ratio, thereby effectively automating the process of implementing a trading strategy such as a buy-write or married put.
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