There’s a new options contract coming this summer.
The Chicago Board Options Exchange, CBOE, announced that on Monday, July 7, it plans to introduce a PM-settled, End-of-Month options series (EOM) options contract. The monthly contracts will have expiration dates falling on the last business day of the month and be indexed to its S&P 500 Index SPX(SM) options.
Why add another contract?
The CBOE said the reason for adding the SPX EOM options to its current SPX product line is in response to requests from asset managers who want to more precisely match SPX option expirations to end-of-month fund cycles and fund performance periods.
The EOM SPX joins CBOE’s other SPX family of contracts – SPX, SPX End-of-Week, SPX End-of-Quarter and SPX LEAPS contracts, according to chief executive officer Ed Tilly.
CBOE’s current offerings:
– End-of-Week options, which expire on the last trading day of a week (other than standard third Fridays)
– Standard options, which expire on the third Friday of each month
– End-of-Quarter options, which expire on the last trading day of the quarter
– LEAPS (Long-term Equity AnticiPation Securities(SM)) options, which are long-term options contracts that can be maintained for a period of up to 15 years.
The SPX EOM options will feature European-style exercise, meaning that the contracts can only be exercised on the last trading day at expiration. SPX EOM options will also feature afternoon settlement, which is preferred by many investors, including institutions with end-of-day reporting requirements.