Cboe flex options market

Designed to broaden institutional investor access to customized derivative products, these contracts are similar in structure to privately negotiated, "over-the-counter" OTC options, however, CBOE FLEX Options offer the surety and convenience of exchange-traded options. FLEX Options have features that may appeal to institutional investors, hedge funds, and others with particular risk management requirements. For example, FLEX options are particularly useful for designing and implementing large-scale equity portfolio hedges with specific time horizons or performance objectives.

Although FLEX Options are not fungible with standard listed index options, they generally are eligible for margin offset against conventional options on the same underlying index provided certain conditions are met, and are also eligible for portfolio margin accounts in most instances. Please refer to "Customer Margin" below for further information. FLEX allows users to trade standard listed options before they are available for trading.

For instance, if SPX had no October options listed, a user could create a FLEX option with standard listed terms i. Once October options become available for trading, your FLEX option will automatically become a standard listed option. FLEX Options are the only listed options that allow users to select option contract terms. Users may specify any of the following terms:.

FLEX options have been designed to allow each customer order to be exposed to a competitive auction process for price discovery. The process occurs under the rules of CBOE which means that customer transactions are effected according to the principles of a fair and orderly market following trading procedures and policies developed by CBOE.

The submission of a Request for Quote "RFQ" through a CBOE member or member firm is the first step in the FLEX process. Upon submission, the RFQ is disseminated to market participants, including on-floor market makers, Remote Market Makers trading electronicallyand member firm traders.

This text message contains all of the contract specifications-underlying, size, type of option, expiration date, strike price, exercise style and settlement basis. During a specified amount of time, responses to the RFQ are received and at the end of the period, the initiator can decide to make a trade, or not.

For more information on the mechanics of executing a FLEX trade, go to the "Trading Index FLEX Options" section below. As issuer and guarantor of all FLEX Option contracts, The Options Clearing Corporation OCC becomes the counterparty to each FLEX trade, providing the financial guarantee that results in the substantial elimination of counterparty credit risk. OCC, founded inis the world's largest derivatives clearing organization. OCC operates under the jurisdiction of the Securities and Exchange Commission SEC and the Commodity Futures Trading Commission CFTC.

The substitution of OCC as the counterparty is achieved through a legally binding novation process that has withstood the test of time. Further, this novation process provides fungibility and helps facilitate secondary market liquidity for FLEX Options. FLEX options are cleared in the same manner as standardized listed options. However, as previously stated, OCC determines prices on a daily basis for all outstanding FLEX positions. These prices are available to OCC Clearing Members, and on the OCC website at www.

For strike prices specified in other than index values, premiums specified in other than a dollar amount per contract, and size specified in other than a number of contracts, CBOE calculates actual strike prices, premium prices and number of contracts for submission to the OCC.

Customizing CBOE FLEX Options

There are two methods of determining the settlement value for Index FLEX options-- customers can prescribe either Opening Settlement or Closing Settlement. Opening settlement value is calculated using the opening price in the primary market for each component security on the specified expiration date of the FLEX Option.

If a security in the index does not open for trading on expiration day, the last reported sales price for that security will be used in calculating the settlement value. Opening settlement value ticker symbols:. It is calculated based on a volume-weighted average of prices reported in the first 5 minutes of trading for each of the component securities.

Closing settlement value is calculated using the closing price in the primary market of each component security on the specified expiration date of the FLEX Option. If a security in the index does not open for trading, the last reported sales price for that security will be used in calculating the settlement value. For American-style Index FLEX Options, settlement value determination only applies to the expiration day of the option.

Exercises tendered prior to the expiration date are settled against the closing value of the index on the day of the exercise. Procedures for trading in FLEX Options differ in many respects from those employed for conventional option transactions. Quotes for FLEX options are generally only generated in response to a Request For Quote RFQ.

No FLEX option series, new or established, is continuously quoted, although orders may be entered into the FLEX electronic book on a daily basis. The Options Clearing Corporation establishes daily prices for series with outstanding open interest, and a Request for Quote can be submitted to determine a current quote.

All options series to be created within the FLEX system must follow the procedures outlined in the steps described below. The ultimate result will be to expose all transactions to the competitive process for price discovery. For more information on creating a FLEX option or the mechanics of trading FLEX options send an email to Flex cboe. In CBOE launched CFLEX, the first internet based, electronic system for trading Index and Equity FLEX options available in the U.

Features of CFLEX include:. The first step in creating and trading any FLEX option is the Request For Quote RFQ. The RFQ is a solicitation of user interest to trade a particular option, whether it is a newly created option or an existing FLEX series. The specific details for the contract, including the underlying, type of option call or putexpiration date, strike price, exercise style and settlement basis must be described in the RFQ.

The RFQ may request either a market, a bid, or an offer. All RFQs must be submitted by a member of CBOE or a non-member that is sponsored by a CBOE member to have direct access to FLEX referred to as a "Sponsored User".

Click here for more information about CFLEX. FLEX trades may also be conducted on the CBOE trading floor through open-outcry trading. FLEX trades executed in open-outcry are reflected on the CFLEX system upon completion. Market Makers, Trading Permit Holders and Floor Brokers acting on behalf of customers will provide Responsive Quotes that are not bound by affirmative quoting obligations.

FLEX quotes are generated in response to an RFQ rather than from an order. The Submitting TPH is under no obligation to accept the best bid or offer. If the best bid or offer is not promptly accepted, the quotes are no longer valid. Quotes are only available upon submission of an RFQ and secondary trading is conducted under the same procedures as series-creating transactions.

However, for secondary trading, RFQs can only specify the strike price in the existing numerical format for that FLEX Option series, not a percentage format. Size may be specified in dollars, or number of contracts. FLEX Options with a settlement value based on the opening prices of the index component stocks in their primary market are not traded on the day the settlement value is determined. Please refer to "Exercises" for further information.

To see FLEX options that have been created and have open interest, check the OCC website: The trading hours for Index FLEX Options are from 8: Central Time Chicago time.

However, no RFQ may be presented to the FLEX Official for open outcry trading unless there is sufficient time prior to the close of trading for the entire trade process to be completed.

There are no position limits for FLEX DJX, NDX, OEX, RUT, SPX or XEO legit internet money making contracts. However, there are reporting requirements for positions that exceed certain thresholds. The position limits for broad-based Index FLEX Options novellus stock buyback than DJX, OEX, NDX, RUT and SPX arecontracts on the same side of the market on a given index.

There are position limits on narrow-based, industry sector and micro-narrow based Index FLEX Options which generally coincide with the position limits for the standard options on those indexes, though some exceptions apply.

Index FLEX Options usd cad chart 20 year not be aggregated with options on any stocks included in the index underlying the FLEX Options, nor will FLEX Options on a given index be combined with FLEX option positions on another index.

However, special aggregation requirements apply for Index FLEX Options with expirations that coincide with standard listed Quarterly and Weekly index options. For more information on position limits and reporting requirements, refer to CBOE Rules 24A. On expiration day, all Index FLEX Options in the money by.

There are no exceptions to this policy. This policy holds for all opening-settled and closing-settled contracts. All FLEX Option customers should notify their brokers about their desire to exercise. FLEX Options exercise procedures follow CBOE exercise rules for conventional options. For all American-style Index FLEX Options, regardless online data entry jobs in kolkata without investment from home the method of settlement value determination opening or closingexercises tendered prior to the expiration date are only against the closing value of the index on the estimating future stock market returns by adam butler and mike philbrick of the exercise.

Like conventional index options, exercises of FLEX Options result in delivery of cash on the business day following expiration or following the day on which the exercise notice is tendered. There are no exercise limits for broad-based FLEX Index Dfo melbourne anzac day opening hours on DJX, NDX, OEX, RUT, SPX, and XEO. For all other broad-based, industry or micro-narrow FLEX Index Options, the exercise limits are equivalent to the FLEX positions limits prescribed in CBOE Rules 24A.

FLEX Options are not taken into account when calculating exercise limits for non-FLEX Options e. FLEX SPX options positions are not netted when is the best time to trade forex market standard non-FLEX SPX positions. Index FLEX Options stock market course in delhi university generally subject to the same customer margin rules that apply to conventional listed index options, and are eligible for portfolio margining accounts.

Margin offsets are allowed for Index FLEX Options on the same index and with the same index multiplier, but with differing exercise styles American or Europeanwhich otherwise meet the standard requirements for offset treatment. Please be aware that pricing patterns may differ between European and American style options. Under certain circumstances, it is possible that the spread margin held by a carrying broker could become insufficient to cover the assignment obligation on the short option if the customer is unable to exercise the long European-style option and that option is trading at a discount to its intrinsic value.

This can also occur between two European-style options with stock brokers on television expirations.

Therefore, the carrying broker-dealer will most likely require higher margin for such spreads. In addition, margin offsets are allowed for Index FLEX Options on the same index and with the same index multiplier but with differing settlement value determinations open or close which otherwise meet the standard requirements for offset treatment.

It should also be noted that although CBOE allows margin offsets between Index FLEX Options that use different settlement value determinations, if both options expire on the same day, two days before that expiration day both options must be margined separately because of the possibly significant differences between the final settlement values of the offsetting options.

Index FLEX Options can be offset against conventional options on the same underlying index provided it otherwise meets the requirements for offset treatment. Under no circumstances can Index FLEX Options on one index be offset with options on any other index for customer margin purposes.

The following is a short, non-exhaustive summary of margin treatment for various strategies applying only to broad-based index options:. For questions concerning customer margin treatment or more details concerning the margin required for various forexware review strategies, please contact Jim Adams in the CBOE Department of Member Firm Regulation at for assistance.

The matters discussed in this section are subject to detailed rules, regulations, and statutory provisions which should be referred to directly for additional detail and are subject to changes that may not be reflected in how to make money in maplestory fast 2016 material.

The following vendors currently display on-line updates of FLEX information. Each terminal currently enabled for options data will display FLEX information. The format currently provided by vendors is in a news headline format. TradeStation Voted Best for Options Traders 2 Years in 9/11 stock market short Row by Barron's.

Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options ODD. Copies of the ODD are available from your broker or from The Options Clearing Corporation, One North Wacker Drive, SuiteChicago, Illinois The information on this website is provided solely for general education make money horse blanket repair information purposes and therefore should not be considered complete, precise, or current.

Many of the matters discussed are subject to detailed rules, regulations, and statutory provisions which should be referred to for additional detail and are subject to changes forex price pattern pdf may not be reflected in the website information.

No us equities in isa within cboe flex options market website should be construed as a recommendation to buy or sell a security or to provide investment advice. The inclusion of non-CBOE advertisements on the website should not be construed as an endorsement or an indication of the value of any product, service, or website. The Terms and Conditions govern use of this website and use of this website will be deemed acceptance of those Terms and Conditions.

My Account Account Settings Sign Out. FLEX Options provide important features such as: Minimization of counterparty credit risk and contract guarantees provided by The Options Clearing Corporation Customized contract terms, such as expiration style and date Price discovery in a competitive auction market with price transparency The administrative convenience of exchange traded options Daily closing prices which are set independently by The Options Clearing Corporation A secondary market to offset positions Index FLEX options are available on any of the Indexes listed at CBOE, including: Features of Index FLEX Options FLEX Options have features that may appeal to institutional investors, hedge funds, and others with particular risk management requirements.

Optioneer trading australia of Contract Terms FLEX Options are the only listed options that allow users to select option contract terms.

Users may specify any of the following cboe flex options market The underlying Index e. Option Type - Call or Put. Expiration Date - Up to 15 years from creation. The expiration date specified must be a business day. Strike Price - May be specified as an index level, as a percentage, a numerical deviation from a closing index level or an intra-day value level, or any other readily understood method for deriving an index level, rounded to the nearest hundredth of an index point e.

Exercise Style - American or European, AM or PM, except as follows: If the expiration specified falls on the third Friday of the month or the first preceding business day if the third Friday is a holidayonly European-style exercise is permitted.

Settlement Value - Settlement may be based on either the opening settlement value or closing settlement value see "Creating a FLEX Options" section for details. Exercise assignment will result in the delivery payment of cash on the business day following expiration. Competitive Price Discovery FLEX options have been designed to allow each customer order to be exposed to a competitive auction process for price discovery.

OCC's Financial Guarantee As issuer and guarantor of all FLEX Option contracts, The Options Clearing Corporation OCC becomes the counterparty to each FLEX trade, providing the financial guarantee that results in the substantial elimination of counterparty credit risk.

Administrative Convenience of FLEX Options FLEX options are cleared in the same manner as standardized listed options. Creating an Index FLEX Option. Calculation of the Strike Price, Premium and Size for FLEX Options Strike Price The strike price may be set at any index level out to two decimal places, e. Premium Price The premium for the RFQ and the executed trade may be expressed in percentage terms of the reference value of the underlying index.

Premiums are rounded to the nearest hundredth greater than or equal to. Size Size for the RFQ and the executed trade may be expressed in millions of dollars of underlying value of the index.

CBOE rounds the notional principal amount to the nearest whole number of contracts greater than or equal to.

The necessary information is then transmitted to OCC for the clearance and settlement process. Size may be represented in number of contracts, e. Settlement Value There are two methods of determining the settlement value for Index FLEX options-- customers can prescribe either Opening Settlement or Closing Settlement.

Opening settlement value Opening settlement value is calculated using the opening price in the primary market for each component security on the specified expiration date of the FLEX Option. Opening settlement value ticker symbols: Closing Settlement Value Closing settlement value is calculated using the closing price in the primary market of each component security on the specified expiration date of the FLEX Option.

Trading Index FLEX Options. A New Way to Trade FLEX: CFLEX Trading FLEX Options Electronically In CBOE launched CFLEX, the first internet based, electronic system for trading Index and Equity FLEX options available in the U.

Features of CFLEX include: FIX and CMiAPIs on CBOE direct Firm sponsored terminals for end user customers Complete anonymity Combination of orders and Request for Quotes Live Order Books Guaranteed participation rights Step One: Request For Quote RFQ The first step in creating and trading any FLEX option is the Request For Quote RFQ. Trading Index FLEX Options in Open Outcry FLEX trades may also be conducted on the CBOE trading floor through open-outcry trading. RFQ Initiation The RFQ sequence for open outcry FLEX trades is as follows.

The Submitting Trading Permit Holder TPH contacts the FLEX Help Desk to generate an electronic RFQ to the appropriate crowd PAR Official. The trading crowd PAR Official announces the RFQ to the trading crowd. Responsive Quotes Market Makers, Trading Permit Holders and Floor Brokers acting on behalf of customers will provide Responsive Quotes that are not bound by affirmative quoting obligations. Responsive Quotes must be communicated to the Submitting TPH within the Request Response Time, which will be a minimum of five minutes.

Responsive Quotes are made verbally in the trading crowd at the end of the Request Response Time. No transaction may take place until the Request Response Time has expired.

Equity FLEX Options

Accepting the Best Bid or Offer FLEX quotes are generated in response to an RFQ rather than from an order. The Submitting TPH decides whether to accept the best bid or offer.

Upon notification of acceptance of a bid or offer by the Submitting TPH, the FLEX Help Desk will disseminate a last sale message as well as enter the transaction into the trade match system and generate a trade confirmation for the parties involved. Generally, only a Submitting TPH may accept quotes made in response to an RFQ. There are two exceptions to this: The Submitting TPH has priority over any party wishing to trade the requested option series up to the full notional amount specified in the RFQ subject to the requirements of Section 11 a of the Exchange Act.

If a party other than the Submitting TPH wishes to trade that option series, and none of the above conditions are met, the other party must submit a new RFQ in order to generate Responsive Quotes upon which a transaction may occur. Secondary Trading Quotes are only available upon submission of an RFQ and secondary trading is conducted under the same procedures as series-creating transactions.

CBOE FLEX options - MarketsWiki, A Commonwealth of Market Knowledge

Information Regarding Open FLEX Series To see FLEX options that have been created and have open interest, check the OCC website: Trading Hours The trading hours for Index FLEX Options are from 8: Position Limits, Exercise Limits and Margin for Index FLEX Options.

Position Limits There are no position limits for FLEX DJX, NDX, OEX, RUT, SPX or XEO option contracts. Exercises On expiration day, all Index FLEX Options in the money by. Limits on Exercise of Index FLEX Options There are no exercise limits for broad-based FLEX Index Options on DJX, NDX, OEX, RUT, SPX, and XEO. Customer Margin for Index FLEX Options Index FLEX Options are generally subject to the same customer margin rules that apply to conventional listed index options, and are eligible for portfolio margining accounts.

The following is a short, non-exhaustive summary of margin treatment for various strategies applying only to broad-based index options: Long Call, Long Put. Cash Account Initial Requirement: Margin Account Initial Requirement: Nine months or less until expiration - pay in Full. Margin Account Maintenance Requirement: Short Call, Short Put. Cash, Cash equivalents or escrow agreement for short put; escrow agreement for short call.

Same as initial, except use current option market value instead of option proceeds. Put Spread or Call Spread - Long side expires with or after short side.

The amount by which long put short call aggregate exercise price is below short put long call aggregate exercise price; long side must be paid for in full. Must maintain the initial spread requirement. Short Put and Short Call. Escrow agreement for put and escrow agreement for call. Short put or short call requirement whichever is greater plus the option proceeds of the other side. Short put or short call requirement whichever is greater plus the current option market value of the other side.

For Questions on Margin Requirements For questions concerning customer margin treatment or more details concerning the margin required for various trading strategies, please contact Jim Adams in the CBOE Department of Member Firm Regulation at for assistance.

Introduction to Options with CBOE

How to Access FLEX Trade Information The following vendors currently display on-line updates of FLEX information. Type NH FLEX [Go]. Institutional Marketing institutional cboe. Related Links Products Main Learn By Product Volatility Strategies Volatility Price Charts Volatility Videos Volatility Bibliography VIX Index IOSCO Statement VIX Index Complaints Uncover Powerful Outcomes.

CBOE Links Government Relations Investor Relations CBOE Livevol Data Shop Livevol CBOE Media Hub System Status Chinese Language Site Risk Management Conference Careers Advertise with CBOE CBOE. Other CBOE Sites CBOE Futures Exchange C2 Exchange Trading Permit Holders. CBOE Options involve risk and are not suitable for all investors.