The Chicago Board Options Exchange (CBOE) has announced that it will launch a new type of option, “Weeklys,” on Friday, October 28, 2005.
Weeklys will have a life of one week, listing on a Friday, and expiring the following Friday, thus providing an efficient way to trade options specifically around certain news or events–such as economic data or earnings announcements.
The first Weekly option contract to be listed will be based on the Standard & Poor’s 500 Stock Index (SPX), will open on Friday, October 28 and will expire the following Friday, November 4. New series will be listed each Friday, expiring the following Friday, except that no Weeklys will be listed that would expire on the third Friday of each month (expiration week for standard options). CBOE will soon announce Weeklys on other classes.
In general, Weeklys will have the same contract specifications as standard options, except for the expiration date and time to expiration. Initially, no more than five strike prices will be listed per class, per expiration (two in-, one at-, and two out-of-the-money strike prices), and no new series will be added between listing and expiration.
SPX Weeklys will be European-style exercise and will offer the same continuous, two-sided quotes as standard options. There are no position or exercise limits; however, reporting requirements apply.