Index Options - Contract Specifications
Airline Index - XAL
The Airline Index is designed to measure the performance of highly capitalized companies in the airline industry. The Index tracks the aggregate performance of major U.S. and overseas airlines.
The Index is equal-dollar weighted, designed to ensure that each of its component securities is represented in approximate equal dollar value. Equal-dollar weighting was established by designating the number of shares of each component security that represented approximately $10,000 in market value, based on closing prices on Oct. 21, 1994 (e.g., a stock that closed at $20 per share would be represented in the Index by 500 shares for a total market value of $10,000). The aggregate value of the stocks was reduced by a divisor to establish an Index benchmark value of 200.00. To ensure that each component stock continues to represent approximate equal market value in the Index, adjustments are made quarterly after the close of trading on the third Friday of January, April, July and October.
Components list as of 10/8/01
The minimum trade size is one option contract. The notional value underlying each contract equals $100 multiplied by the Index value.
Three consecutive near-term expiration months plus two successive months from the January cycle.
The Saturday following the third Friday of the expiration month.
|Last Trading Day
Two business days prior to expiration (normally a Thursday).
|Limited Exercise of Options
European style. Options may be exercised only on the last business day prior to expiration (normally a Friday). Writers are subject to assignment only at expiration. Check with your broker to ascertain cut-off times for exercise and provisions for automatic exercise.
Cash settlement based on the dollar difference between the final settlement value of the Index and strike price of the contract multiplied by $100.
|Exercise Price Intervals
Exercise (strike) prices are set at five-point intervals, bracketing the current value of the Index when the Index is above 200. If the Index is below 200, the interval will be 2 � points.
|Option Premium Quotations
Stated in dollars and fractions. One point equals $100. Minimum tick for series trading below 3 is 1/16 ($6.25); for all other series, 1/8 ($12.50).
|Final Index Settlement Value
Determined on the last business day prior to expiration, based on the first (opening) reported sale price for each component stock.
Next business day following expiration.
15,000 contracts on the same side of the market.
|Minimum Customer Margin for
Premium plus 20% of the aggregate Index value (Index value x $100) reduced by any out-of-the-money amount to a minimum of premium plus 10% of the aggregate Index value.
9:30 a.m. to 4:02 p.m., New York time.
Specialist/Registered Options Trader.
|Final Settlement Value