A sponsored option is a new derivative product in Canada to allow investors the privilege of buying or selling the underlying asset at a given price (exercise price) up to a given expiration date. There are two key differences between the sponsored options and exchange traded options. One is that the contract terms of the sponsored option are set by the sponsor and are not standardized. This is in contrast to the traditional exchange traded option on the Bourse of Montreal for which the contract terms are standardized and set by the Bourse of Montreal. The other is that an individual investor cannot write sponsored options as the sponsor is the sole writer of the options.
"We are delighted to have Citibank Sponsored Options on QQQ available to Canadian investors through this co-operation with the Montreal Stock Exchange and Citibank," said Helen Kearns, president of Nasdaq Canada. "We know that Canadians are looking for more ways to invest in Nasdaq-branded products and the Citibank sponsored options provides an excellent new opportunity to do that."
John Jacobs, chief executive officer of Nasdaq Financial Products Services Inc., adds that, "Now that sponsored options in QQQ are able to trade in Canada, we look for investor awareness of the Nasdaq-100 Index® and QQQ to increase. With the Nasdaq-100 Index already linked to the return of several Canadian notes and used as a benchmark for a number of Canadian mutual funds, the sponsored options should add to the visibility of the Nasdaq-100 in Canada."
Citibank sponsored options on the Nasdaq-100 Index Tracking StockSM will allow Canadian investors to gain long-term exposure to QQQ at a fraction of the cost underlying the asset. Trading began on January 28, 2002.
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