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SFE is pleased to announce the addition of serial futures to the SPI product suite. Commencing 1 September 2006, two serial month futures will be available at all times in addition to the six quarterly expiry months (March, June, September, December) currently available.
Also, the expiry of serial month options will be aligned to the expiry of the serial month futures so that both serial month futures and options expire on the third Thursday of the settlement month at 12:00pm.
The listing of serial month SFE SPI 200™ Futures and alignment of serial month SFE SPI 200™ Options to the respective serial month SFE SPI 200™ Futures will bring a number of benefits to users. For instance;
- Additional futures expiry months will allow hedgers to select the month that best fits their investment time frame thereby reducing basis risk.
- 'In-the-money’ serial month option positions taken to expiry will receive a cash settled future that expires at the same time as the option. This means that serial month options will be effectively cash settled. This allows for easier administration of serial option positions taken to expiry compared to the current process where ‘in-the-money’ serial month option positions receive a futures position in the next financial quarter month.
- Removal of Pin Risk. Writers of serial options will no longer incur risks associated with serial SFE SPI 200™ Futures closing at the strike price on expiration. For example, uncertainty as to whether an option will be exercised by the holder.
