SEC approves CBOE Holdings' proposal to trade SPXpm

SEC approves CBOE Holdings' proposal to trade SPXpm

02/09/2011

CBOE Holdings, Inc. (NASDAQ: CBOE) announced today that the Securities and Exchange Commission(SEC) has approved its rule filing to launch, on a pilot basis, SPXpm, its proposed new S&P 500 Index option product. SPXpm will be traded on the C2 Options Exchange (C2), the Company's all-electronic exchange.  

C2's SPXpm product will be a cash-settled index option based on the S&P 500 Index, the premier benchmark of the broader U.S. market.  SPXpm is almost identical 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, as the SPXpm name implies, it has a "p.m." settlement.  

"We are pleased to provide investors with a new, efficient way to trade options on the S&P 500," said William J. Brodsky, CBOE HoldingsChairman and Chief Executive Officer.  "SPXpm will offer users 'point-and-click' convenience, and the large contract size -- with one SPXpm contract being ten times larger than one SPY option contract  -- will make SPXpm extremely cost-effective to trade."  

Brodsky continued, "The launch of SPXpm will enable us to broaden our customer reach by providing two very deep pools of liquidity to trade the S&P 500 Index -- one trading SPXpm electronically on C2, and the other trading SPX AM with the ability to negotiate large, complex orders afforded by floor trading at CBOE."    

Details regarding a launch date will be announced in the near future.

SPXpm Contract Specifications:

 

Symbol

SPXpm

 

Settlement

PM-settled, European style exercise

 

Multiplier

$100

 

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.

One final noteworthy item, the launch of SPXpm options on C2 will not impact, nor will it have any effect on, how CBOE calculates the CBOE Volatility Index (VIX).  VIX is calculated by using real-time SPX option bid/ask quotes.  VIX uses near-term and next-term at- and out-of-the money SPX options with at least eight days left to expiration and then weighs them to yield a constant, 30-day measure of the expected volatility of the S&P 500 Index.  The current methodology being used to derive the value of VIX will remain exactly the same.

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.