As of July 16th NYSE Liffe will introduce weekly options on three of the most liquid shares traded on the Amsterdam market: ING Group N.V., Royal Dutch Shell and ArcelorMittal. These innovative contracts, which will provide investors with more opportunities to trade the major Amsterdam blue chip stocks, are the first ever weekly options on individual shares in Europe.
The key attraction of weekly options is that they cost less to trade than longer-dated alternatives. Generally the premium payable on short-lived weekly options is lower because its time value element is smaller. For the same reason they also offer greater leverage: even a small price movement in the individual shares can generate an attractive return. Therefore weekly options can benefit from the volatility of an individual share with short-term trading strategies.
The launch of weekly options on individual stocks follows the successful introduction of AEX-index daily and weekly options, launched respectively in March 2008 and May 2006. Since the start in 2006 more than 14 million AEX weekly options contracts have been traded, with an Average Monthly Volume of 284,000 lots. The Average Monthly Volume of the AEX daily options currently is 368,000 lots. The AEX-index daily and weekly options are the world’s most traded short term equity index options contracts.
Alan van Griethuysen, Business Head Benelux and Asia at NYSE Liffe said: “Short term options hit the ground running when we introduced them on the AEX-index as they cater to the investment needs of a broad range of both retail and professional investors. By extending the weekly options into single stock names we are responding to the needs of investors and, in particular, to Dutch retail investors, knowledgeable in options trading. Weekly options on high profile single stocks is the latest product innovation from NYSE Liffe and we believe it will create the same vibrant order screens we’ve seen from day one in the AEX Weekly options.”
Appendix:
Contract
type
Trading
symbol
Trading
symbol
Trading
symbol
Last
trading day
ArcelorMittal
Royal
Dutch Shell A
ING
Group N.V.
Weekly
option
1MT
1RD
1IN
1st
Friday of the month
Weekly
option
2MT
2RD
2IN
2nd
Friday of the month
Monthly
option
MT*
RD*
ING*
3rd
Friday of the month
Weekly
option
4MT
4RD
4IN
4th
Friday of the month
Weekly
option
5MT
5RD
5IN
5th
Friday of the month
*) There is no separate weekly option class expiring on the third Friday of the month, as the week leading up to that day is the last week of trading in the monthly options expiring that month.
- Introduced on Friday mornings before the start of trading, the contracts will expire on the following Friday.
- If a fifth Friday exists in the month, there will be a fifth weekly option contract as shown in the table above.
- The weekly options have the same contract specifications as the existing monthly options on single stocks.
- American style and physical delivery.
- Initially, five in-the-money, one at-the-money and five out-of-the-money series will be introduced.
- The weekly options are supported by the successful ‘full screen’
market model which gives investors access to competitive prices throughout
the trading day by ensuring a constant display of bid and offer prices, thus
improving on-screen liquidity.
