Chicago Board Options Exchange To Launch Credit Default Options On GM, Ford, Lear, Hovnanian Enterprises And Standard Pacific

The Chicago Board Options Exchange (CBOE) plans to launch credit default options on five individual companies General Motors Corporation (GM), Ford Motor Company (F), Lear Corporation (LEA), Hovnanian Enterprises, Inc. (HOV) and Standard Pacific Corp. (SPF) on Tuesday, June 19.

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The Chicago Board Options Exchange (CBOE) plans to launch credit default options on five individual companies: General Motors Corporation (GM), Ford Motor Company (F), Lear Corporation (LEA), Hovnanian Enterprises, Inc. (HOV) and Standard Pacific Corp. (SPF) on Tuesday, June 19.

CBOE received regulatory approval yesterday from the Securities and Exchange Commission (SEC) to list and trade credit default options such as these, and approval for CBOE’s Credit Default Baskets is expected soon.

CBOE’s credit default options offer the opportunity to hedge or speculate on the risk of credit events such as bankruptcy and failure to pay.

“We are very pleased to receive SEC approval for these products which we first proposed last June,” says CBOE Chairman and CEO William J. Brodsky. “Investors can now take advantage of the synergies between options prices, volatility and credit risk, hedging all three on one electronic platform, CBOEdirect. Credit Default Options are a natural extension of CBOE’s product line and will bring great benefits and tremendous cost savings to a market that has exploded into a $26 trillion business.”

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