ASX All Ordinaries Index Options

On 8 November ASX will commence trading in put and call options over the All Ordinaries Index. Index options will be complemented by the simultaneous listing of Low Exercise Price Options (LEPOs) over the All Ordinaries Index. "Index options are now an established derivative product around the world and we expect them to be attractive to investors in Australia", noted Richard Humphry, ASX Managing Director. "On the first and largest options market, the Chicago Board Options Exchange (CBOE), index options account for more than 30 percent of their total business. In 1998 the CBOE traded 67 million contracts. "On Eurex it was a similar story. In the same year, 35 per cent of their equity options business was in similar products. These are successful and growing businesses and I am sure they will be in Australia too." ASX has extensive experience in options markets dating back to 1976. The exchange offers a proven state of the art derivatives trading system and formal market makers with international track records in the field of index options. All Ordinaries Index options and LEPOs will be cash-settled and expiring on financial quarters. Just as with stock options, the ASX's fully integrated systems mean that investors will be able to use approved shares held with CHESS as cover for their written positions. LEPOs provide a futures-style exposure that allows investors to implement futures and options strategies in an integrated trading and clearing environment. Mr Humphry commented that LEPOs over individual companies have grown dramatically over the last year with 20 stocks now trading on the ASX options market. In 1999 LEPOs turnover on the ASX showed a 240 percent improvement on the previous year. "They offer investors choice, one-stop shop advantages, efficiency and greater investment sophistication. Products that cater for the increasing strategic awareness of the Australian investing public,'' Mr Humphry said.