- Beginning on May 10, 2002, investors will be able to trade the Korea Treasury bond (KTB) options on KOFEX.
- Against the previous week's weakness, the KOSDAQ50 Futures market resumed its upward march this week.
- The KTB futures market displayed its downward trend throughout the week.
- In spite of the domestic stock markets' upturn, the KOFEX USD/KRW currency rate continued to move upward taking correction toward the end of the week.
Beginning on May 10, 2002, investors will be able to trade the Korea Treasury bond (KTB) options on KOFEX. Unlike the existing options products such as the KOSPI200 Options, the KOSDAQ50 Options and the USD/KRW Currency Options in Korea, the Treasury bond options are American style derivatives so that investors can exercise their rights before maturity. Additionally the 3-yr Korea Treasury bond Futures were listed on Sep. 29, 1999 at KOFEX.
The specifications for the instrument is as follows:
- Underlying Asset, The Korea Treasury bond Futures (Options on Futures)
- Trading Unit, One KTB Futures contract
- Exercise Style, American (exercisable at any time before expiration)
- Premium Quotation, To two decimal places (on percentage basis)
- Tick Size & Tick Value, Tick size: 0.01, Tick Value: KRW 10,000
- Strike Price, Strike prices are set with an interval of 0.50, Total 9 strike prices are initially listed: one at the money, four in the money, and four out of the money (Additionally listed as the price of underlying asset has changed)
- Number of Contract listed, 4 contract months, Contract Month, Consecutive 3 months and one of additional month from March quarterly cycle
- Daily Price Limit, None
- Position Limit , It can be adopted if necessary
- Trading Hours, 09:00 ~15:00 (No lunch break, Mon. - Fri.) Including the last trading day
- Last Trading Day, One business day before the first Wednesday of each contract month (If the calculated last trading day happens to be in the previous month - In case the first Wednesday is the first day of the contract month - the last trading day shall be the first trading day of the contract month.)
- Expiration Day, Last Trading day of the contract month
- Exercise, The time limit for exercise request: 90 min. after closing the market (16:30); Exercise Limit: None; Exercise: OTM Options: Possible. ITM Options: Automatically exercised on the last trading day
Against the previous week's weakness, the KOSDAQ50 futures market resumed its upward march this week. The lead month contact, KQ203 increased by 9.4 points or 9.54 percent finishing the week at 107.90 points. More importantly the KOSDAQ50 March contact with an adjusted multiplier of KRW 200,000 showed its upward movement for five days in a row.
Speaking of the two local stock markets in Korea, both the KOSPI and the KOSDAQ Index represented their strengths gaining by 66.21 points or 9.34 percent and 4.45 points or 5.81 percent to close the week at 774.68 points and 76.47 points respectively while the US NASDAQ Composite Index ended the week just 0.38 percent higher at 1,937.70 points.
The major reasons for the strength are as follows:
- Huge amount of net buying in local stick markets by foreign and institutional investors
- Signs on the improvement of the international semiconductors prices
- Greenspan's upbeat comment on the US economy at the US Senate
This week, the KTB futures market displayed its downward trend throughout the week. Actually, the KOFEX bond futures market began this week with some strength influenced by the uprising US interest market.
However toward the middle of the week, the bond futures market turned downward thanks to lack of interests in the government bond auction on Monday. At the 10-yr Korea Treasury bond auction, a total amount of KRW 840 billion was sold with an average interest rate of 7.12 percent, which was higher than expectation.
At the end of the week, in response to the KTB203 contract's 60-tick loss from Tuesday to Thursday, the fixed-income futures market made a slight gain.
Eventually, the current month contract KTB203 decreased slightly by 3 ticks during the week finishing the week at 103.19. Additionally, the volume in the KTB futures market totaled 300,668 contracts, down 85,201 contracts from the previous week.
USD/KRW Currency Futures Market
In spite of the domestic stock markets' upturn this week, the KOFEX USD/KRW currency rate continued to move upward taking correction toward the end of the week.
The current month contract USD202 gained KRW 6.0 or 0.45 percent finishing the week at KRW 1,329.5, compared to KRW 1,323.5 on the previous weekend.
The major reasons for the continued ascent this week was the depreciation of Japanese Yen falling to 134.77 Yen per USD in New York F/X market on Thursday, nearly the lowest level in three years. Compared to the recent strong depreciation of Japanese Yen, the Korean Won has been less depreciated against US Dollar due to the local stock market's revival.
The daily average volume in the KOFEX F/X futures market posted 6,539 contracts, down 914 contracts or 16.3 percent form the previous week.
