New Range Options from CBOE

CBOE to Launch S&P 500 Index Range Options!

Coming Soon ….. Options To Capitalize On Range Trading

Allows Investors to Trade S&P 500 Index Options Using a Range of Strike Prices

by Ian Harvey

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August 27, 2012

The Chicago Board Options Exchange (CBOE) just announced plans to launch a new type of S&P 500 Index (SPX) options contract, known as the CBOE S&P 500 Range options. You can read the exchange's press release, or read the copy of the news release below, outlining the details.

These options are set to begin trading on August 28 and are designed to provide individual investors with a lower-risk, lower-cost way to trade SPX options. They will work by paying an amount if the settlement value of the underlying index at expiration falls within a "range length." The range length will be set at 70 S&P 500 Index points.

"Range options give investors with an outlook on S&P 500 Index prices a new way to gain exposure to the market -- with less need for price precision," noted CBOE Chairman and CEO William J. Brodsky. "The new contract brings another dimension to our extensive S&P 500 Index option complex. Like SPX, SPX Weeklys and SPXpm, these options provide a unique way for our customers to trade the S&P 500. Each of these products underscores CBOE's commitment to develop new and innovative products that address the diverse needs of investors."

The CBOE will only release what they think will be actively traded. This new product could offer individual investors a new way to limit risk and potentially profit from different type of trading environments.


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NEWS RELEASE

August 21, 2012

CHICAGO, Aug. 21, 2012 /PRNewswire/ -- Chicago Board Options Exchange, Incorporated (CBOE) announced today that it will launch trading in a new type of S&P 500® Index options contract, known as CBOE S&P 500 Range options (ticker: SRO), beginning on Tuesday, August 28.

CBOE Range options were designed to provide individual investors with a lower-risk, lower-cost way to trade S&P 500 Index options.

SROs pay an exercise settlement amount if the settlement value of the underlying index at expiration selected by the investor falls within a specified "range length." The range length for SROs will be set at 70 S&P 500 Index points.

SRO payouts work as follows: If the S&P 500 Index settlement value falls within the middle 50 points of the 70-point range, the payout for the option will be $1,000. If the S&P 500 Index settlement value falls within the 10 points on either side of the 50-point range, the payout amount will decrease linearly (e.g., positive payout will be between $999 to $1) to zero.

"Range options give investors with an outlook on S&P 500 Index prices a new way to gain exposure to the market -- with less need for price precision," CBOE Chairman and CEO William J. Brodsky said. "The new contract brings another dimension to our extensive S&P 500 Index option complex. Like SPX, SPX Weeklys and SPXpm, Range options provide a unique way for our customers to trade the S&P 500. Each of these products underscores CBOE's commitment to develop new and innovative products that address the diverse needs of investors."

For more information on CBOE S&P 500 Range options, see www.cboe.com/SRO.

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 (the VIX Index). 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 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®, FLEX®, LEAPS®, CBOE Volatility Index® and VIX® are registered trademarks, and BuyWrite(SM), BXM(SM), SRO(SM), SPX(SM), Weeklys(SM) and The Options Institute(SM) are service marks of Chicago Board Options Exchange, Incorporated (CBOE). SPXpm(SM) is a service mark of C2 Options Exchange, Incorporated (C2). Standard & Poor's®, S&P® and S&P 500® are registered trademarks of Standard & Poor's Financial Services, LLC and have been licensed for use by CBOE.

CBOE-OE

SOURCE Chicago Board Options Exchange


Further Articles Relating to the Week Ahead

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3. The Past Week Stock Market Results, August 27, 2012

4. The Major ETFs in the Week Ahead , August 27, 2012

5. Stock Market Monday and Underperformance, August 27, 2012

6. Hedge Fund Managers Becoming More Bullish, August 27, 2012


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