CBOE To Launch Mini-SPX Index Options

The Chicago Board Options Exchange (CBOE) will launch Mini SPX options, based on the Standard & Poor's 500 Stock Index, on Tuesday, October 25,2005. Mini SPXoptions (ticker symbol XSP) will be 1 10th the value of the S&P 500 Index,

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The Chicago Board Options Exchange (CBOE) will launch Mini-SPX options, based on the Standard & Poor’s 500 Stock Index, on Tuesday, October 25,2005.

Mini-SPXoptions (ticker symbol XSP) will be 1/10th the value of the S&P 500 Index, and will trade on CBOE’s Hybrid 2.0 Trading System. Trading XSP options on the hybrid system is supposed to offer investors a smaller-sized S& P 500 contract, allowing electronic trading and the open-outcry market on a single platform.

Vice chairman of CBOE Edward T. Tilly claims that the Mini-SPX options provides the advantages of trading the broad-market S&P 500, and are in the form of a “manageably sized contract, with the certainty of European-style exercise, efficiency of cash-settlement and the benefits of our Hybrid Trading System, all of which will appeal to a wide range of customers.”

“Historically, options have been a great way to trade the overall direction of the market – as defined by the S&P 500,” said Robert Shakotko, managing director of index services at Standard & Poor’s.”With over $3.5 trillion benchmarked to the S&P 500, the new Mini-SPX options will provide investors with access to the world’s most followed index in a liquid and affordably-sized contract.”

The new options are a smaller sized version of SPX options that currently trade at CBOE, and will have similar contract characteristics. The Mini-SPX options have a multiplier of $100. For example, if the S&P 500 Index is at 1232.56, the Mini-SPX would have a value of 123.26, and notional value of the options would be $12,326. There are no position limits for Mini-SPX

There are reporting requirements for same-side aggregate positions over 100,000 contracts. The last trading day for the Mini-SPX options generally will generally be the Thursday prior to expiration, and trading hours will be 8:30 a.m. to 3:15 p.m. Central Time.

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