CBOT electronic market-makers provide 2-sided quotes in the nearest 3 terms, with volume of 200-up (1000-up DJX size when you factor in the 5x multiplier). For at-the-money front-month options, investors are capitalizing on a very narrow bid-ask spread of 3 or 4 ticks at-the-money, which translates to $15 or $20 in cash value.
As one prominent CBOT/CBOE trader explains, DJX options may have a similar bid-ask spread of $15 or $20 cash value at-the-money, but you must factor in the 5X multiplier - you have to trade 5 DJX options for every 1 mini-sized Dow option. This fact widens the bid-ask equivalent to $75 in the DJX at-the-money, which is driving more customers to trade the tighter markets in the CBOT mini-sized Dow options. "The CBOT product is the premier Dow derivative based on cost to trade and liquidity in the market."
The recently launched RFQ functionality further enhances the mini-sized Dow options market by providing flexible, transparent access to individual strikes and complex spread transactions without the execution risk of "legging."
Until the RFQ function was launched, electronic traders in the U.S. would have to use limit orders to gain price discovery inside the posted bid-ask, and execution risk was a major concern. The CBOT RFQ resolves these inefficiencies with market-makers competing on every quote, with execution in one transaction and one price.
This is the premier RFQ product for options on US index futures, and volume growth reflects the leadership of the CBOT electronic platform in the market. Traders can quote, view, respond, and trade over 32 options strategies directly on the platform, including spreads, straddles, strangles, butterflies, etc.
Check out the benefits of using CBOT's electronic platform to execute outright and strategy options orders. For more information on mini sized Dow options and the RFQ please contact CBOT Financial Markets Development at 312.341.7955 or send an email to DowInformation@cbot.com.
Dow Complex volume and open interest.
CBOT mini-sized Dow options information, including free live quotes.
