CHICAGO, IL, May 13, 2010 - The Chicago Board Options Exchange (CBOE) today announced plans to begin trading options on the S&P 500 Annual Dividend Index (ticker symbol - DIVD) on Tuesday, May 25, 2010. Initially, two annual expirations -- December 2010 and December 2011 -- will be listed.
Introduction of S&P 500 Annual Dividend Index options will mark the second CBOE-exclusive dividend index options contract launched by the Exchange this year. On March 5, CBOE began trading in S&P 500 Quarterly Dividend Index options (ticker symbol - DVS) with a quarterly "accrual period," for market users with quarterly dividend exposures. DVS was the first contract of its kind in the U.S.
The S&P 500 Annual Dividend Index options contract was designed for customers who are accustomed to looking at dividend movements over an entire year, versus on a quarter-by-quarter basis. Further, dividend index contracts created in Europe in recent years are also based on an annual accrual period.
Both of CBOE's S&P 500 Dividend Index options contracts provide direct exposure to the dividend risk of the S&P 500 index. The options allow investors to capture the difference between forward implied dividends, the market's best estimate of future dividend payments, and realized dividends - the dividends that are actually paid over those periods.
The dividend indexes, calculated by Standard & Poor's, reflect ordinary cash dividends for corporations comprising the S&P 500 Index over either an annual or quarterly accrual period. Both the annual and quarterly S&P 500 Dividend Indexes are calculated using the same set of component securities, same shares outstanding, same capitalization-weighting methodology and same index divisor as are used to calculate the S&P 500 Index.
For DIVD, the annual accrual period runs from the business day after the December expiration through the December expiration one year later. For DVS, the quarterly accrual period runs from the business day after the March, June, September or December expiration through the third Friday of the next quarterly expiration month. At the end of the each accrual period, the Index is reset to zero, and a new accrual period begins.
Group One Trading, LP, has been named the Designated Primary Market Maker (DPM) for S&P 500 Annual Dividend Index options. It is also the DPM for S&P 500 Quarterly Dividend Index options.
For additional information on S&P 500 Annual Dividend Index options, including contract specifications, price charts, ticker symbols and frequently-asked questions, see www.cboe.com/DIVD.