CBOE Holdings, Inc. (NASDAQ: CBOE) announced today that it will begin trading SPXpm, its new S&P 500 Index options product, on Tuesday, October 4. SPXpm options will be traded on the Company’s all-electronic C2 Options Exchange (C2).
C2’s SPXpm product is a cash-settled index option based on the S&P 500 Index, the premier benchmark of the broader U.S. market. SPXpm is similar in structure to the Chicago Board Options Exchange’s (CBOE) flagship S&P 500 SPX contract, the most-actively-traded U.S. index option product, except it has “p.m.” settlement.
“We are pleased to announce a launch date for what we believe will be another major product for CBOE Holdings,” said CBOE Holdings Chairman and Chief Executive Officer William J. Brodsky. “In designing an electronic compliment to our flagship SPX option, we worked closely with customers to create the “best in class” among electronically traded S&P 500 products. The result is a product tailored to provide point-and-click access to the S&P 500 Index, with greater efficiency, greater control and lower costs.”
One SPXpm option contract is ten times larger than one SPDR ETF options contract (SPY), significantly lowering the cost of accessing a p.m.-settled S&P 500 contract. The new contract also features the ease of cash settlement, as opposed to physical settlement in ETF options. Finally, SPXpm uses European exercise, which eliminates the risk of early assignment.
SPXpm should appeal to a diverse group of customers including active traders, high-net-worth investors, retail online users and high frequency traders. OTC participants may use SPXpm as an exchange-traded alternative that eliminates counterparty risk.
With SPXpm’s launch on C2, trading alongside SPX on CBOE, customers will have two very deep pools of liquidity in which to trade S&P 500 cash index options – one that favors the convenience of screen trading, and one that provides the flexibility afforded by floor trading to negotiate large, complex orders.
|SPXpm Contract Specifications:|
|Settlement||PM-settled, European style exercise|
|Premium Quote||Stated in decimals. One point equals $100. Minimum tick for options trading below 3.00 is 0.05 ($5.00) and for all other series, 0.10 ($10.00).|
|Strike Price Intervals||The minimum interval for SPXpm options shall be no less than five points.|
|Expiration Months||Up to twelve near-term contracts. LEAPS may also be listed.|
|Expiration Date||Saturday following the third Friday of the expiration month.|
|Last Trading Day||Trading in SPXpm options will ordinarily cease on the business day (usually a Friday) preceding the expiration date.|
|Trading Hours||8:30 a.m. to 3:15 p.m. (CT)|
A complete overview of SPXpm can be found at: http://www.cboe.com/SPXpm.
CBOE Holdings, Inc. is the holding company for Chicago Board Options Exchange (CBOE), C2 Options Exchange and other subsidiaries. CBOE, the largest U.S. options exchange and creator of listed options, continues to set the bar for options trading through product innovation, trading technology and investor education. CBOE offers equity, index and ETF options, including proprietary products, such as S&P 500 options (SPX), the most active U.S. index option, and options on the CBOE Volatility Index (VIX). Other products engineered by CBOE include equity options, security index options, LEAPS options, FLEX options, and benchmark products such as the CBOE S&P 500 BuyWrite Index (BXM). CBOE’s Hybrid Trading System incorporates electronic and open-outcry trading, enabling customers to choose their trading method. CBOE’s Hybrid is powered by CBOEdirect, a proprietary, state-of-the-art electronic platform that also supports C2 Options Exchange (C2), the CBOE Futures Exchange (CFE), CBOE Stock Exchange (CBSX) and OneChicago. CBOE is home to the world-renowned Options Institute and www.cboe.com, named “Best of the Web” for options information and education.
CBOE is regulated by the Securities and Exchange Commission (SEC), with all trades cleared by the OCC.
CBOE®, Chicago Board Options Exchange®, CBSX®, CBOE Stock Exchange®, CFE®, CBOEdirect®, FLEX®, Hybrid®, LEAPS®, CBOE Volatility Index® and VIX® are registered trademarks, and BuyWrite(SM), BXM(SM), SPX(SM), CBOE Futures Exchange(SM) and The Options Institute are servicemarks of Chicago Board Options Exchange, Incorporated (CBOE). SPXpm(SM), C2(SM), and C2 Options Exchange(SM) are service marks of C2 Options Exchange, Incorporated (C2). Standard & Poor’s®, S&P®, S&P 500® and SPDR® are registered trademarks of Standard & Poor’s Financial Services, LLC and have been licensed for use by CBOE and C2. SPXpm is not sponsored, endorsed, sold or promoted by Standard & Poor’s, and Standard & Poor’s makes no representation regarding the advisability of investing in SPXpm.
This press release may contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those statements that reflect our expectations, assumptions or projections about the future and involve a number of risks and uncertainties. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause actual results to differ materially from that expressed or implied by the forward-looking statements, including: legislative or regulatory changes; changes in law or government policy; increasing competition; loss of our exclusive licenses; decrease in trading volumes; an inability to introduce competitive new products and services; competitive pressures on our existing products, services and trading access fees; changes in price levels and volatility in the derivatives and equity markets; economic, political and market conditions; increases in our fixed costs and expenses; loss of existing customers; difficulty developing strategic relationships and attracting new customers; increased costs related to, or the loss of, intellectual property; rapid technological developments; increases in trading volume and order transaction traffic that we cannot accommodate; our ability to maintain our growth effectively; damage to our reputation and brand name; loss of market data revenue; detrimental changes to our fee structure; failure to effectively monitor and manage our risks; customer consolidation; and changes to the tax treatment for options trading.
More detailed information about factors that may affect our performance may be found in our filings with the SEC, including in our Annual Report on Form 10-K for the year ended December 31, 2010 and other filings made from time to time with the SEC.