ADX plans a roll-out of new products in the coming months, the first step of which are the options, as part of a business building program. The American-style options – i.e, exercisable at any time In the life of the underlying futures contract - will broaden ADX's product offering and are designed to complement the three initial contracts.
Trading volumes since the exchange opened on 12 January have been moderate and steadily increasing. ADX's performance in the first weeks has been solid with interest in all of the three contracts.
“These options are easy to use and provide the market with a more flexible and cost-effective risk management tool.” ADX managing director, Mr John Herron, said. “As with our futures contracts, electronic market makers will facilitate their liquidity.”
Options on ADX three month interest rate futures will be listed in financial quarter months and will feature strikes every 0.25 per cent with a three-year maturity horizon.
With the five year bond futures, options will be listed in two financial quarter months with options strikes available in multiples of 0.5 per cent, and a minimum of 10 strikes available either side of "at the money".
Options on MSCI Aussie futures will be listed in financial quarter months and available up to four quarter months ahead. Options strikes will be available in multiples of 10 index points with a minimum price movement of 0.1, representing a value of AUD10.
“We will list the most frequently demanded combinations of options, for example at-the-money straddles, directly into the trading system as specific instruments in their own right," Mr Herron said. "This will allow for extended arbitrage opportunities.”
