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"Intra-Day Options on interest rate futures are a new and convenient tool for institutions with interest rate exposure to manage event risk surrounding the release of economic data and official cash rate announcements," said Peter Hiom, General Manager Strategy and Business Development at SFE. "Judging by industry feedback and the ongoing success of SFE's Overnight Options, these new one-session options should be well received."
As well as hedging positions from event risk, Intra-Day Options provide new trading opportunities with traders able to profit by anticipating short-term price movements in the interest rate market. Intra-Day Options can also be used to limit losses in the event of rapid and unexpected price movements.
"Intra-Day Options are being introduced following market consultation with SFE Participants and institutional clients," said Mr Hiom. "Part of the appeal of Intra-Day Options is they carry very little time-value in their premium, making them extremely cost effective. Also being exchange-traded they enjoy both price transparency and ease of access to the trading community via the SYCOM® trading platform."
SFE Intra-Day Options join an existing range of successful interest rate derivative products traded on SFE. The SFE 3 Year Treasury Bond Futures contract is among the most actively traded interest rate contracts in the world, behind only those of the Chicago Board of Trade and the world's largest exchange EUREX. More recently the SFE Overnight Options joined its 3 Year and 10 Year counterparts in the ranks of the world's most actively traded contracts (as reported by Futures and Options Week, 18 March 2002). "Given the 47% increase in volumes of the Overnight Options in 2002, we are hopeful the SFE Intra-Day Options can make a similar impact," added Mr Hiom.
Additional interest rate derivatives traded on SFE include Australian and New Zealand Bank Bill Futures and options, New Zealand 3 Year Futures and Options, and standard options on SFE 3 Year and 10 Year Treasury Bond Futures.
