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Trading Weekly Options + Online Video Course: Pricing Characteristics and Short-Term Trading Strategies by Russell Rhoads

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CHAPTER 2

Short-Term Index Options

Short-dated options, under the name weeklys, were first launched on indexes in 2005. In 2010, weeklys were introduced on stocks and then exchange-traded funds. Once short-dated options were offered on equity products, the popularity of weeklys began to take off. The two original weeklys options were listed on the S&P 500 (SPX) and S&P 100 (OEX) indexes. Both continue to be listed, with SPX and OEX options having been expanded to include several consecutive weeks of short-dated option series. In addition to SPX and OEX, S&P 100 European Style (XEO) short-dated options are available for trading, along with short-dated options on the Nasdaq-100 (NDX), Russell 2000 (RUT), and Dow Jones Industrial Average (DJX). Each of these has their own unique features so they will be briefly covered individually.

Dow Jones Industrial Average (DJX)

The typical symbol associated with the Dow Jones Industrial Average is DJIA. However, options on this index are signified using the ticker DJX. DJX is the symbol used for index options that are based on the DJIA. In addition to having a different ticker, the level of DJX is 1/100th that of the commonly quoted DJIA. For example if the DJIA closes at 13,500, DJX will be quoted at 135.00. This adjustment is made because the trading value of an option on an index quoted at 135.00 would be more reasonable than an option quoted on an index trading at 13,500. Therefore DJX is a modified version of the DJIA, but tracks the ...

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