CBOE launching S&P 500 index range options

Trading begins on Tuesday, Aug. 28

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The following is from CBOE...

Chicago Board Options Exchange, Incorporated (CBOE) announced today that it will launch trading in a new type of S&P 500® Index options contract, known as CBOE S&P 500 Range options (ticker: SRO), beginning on Tuesday, August 28. 

CBOE Range options were designed to provide individual investors with a lower-risk, lower-cost way to trade S&P 500 Index options. 

SROs pay an exercise settlement amount if the settlement value of the underlying index at expiration selected by the investor falls within a specified "range length." The range length for SROs will be set at 70 S&P 500 Index points.   

SRO payouts work as follows: If the S&P 500 Index settlement value falls within the middle 50 points of the 70-point range, the payout for the option will be $1,000.   If the S&P 500 Index settlement value falls within the 10 points on either side of the 50-point range, the payout amount will decrease linearly (e.g., positive payout will be between $999 to $1) to zero.

"Range options give investors with an outlook on S&P 500 Index prices a new way to gain exposure to the market -- with less need for price precision,"  CBOE Chairman and CEO William J. Brodsky said.  "The new contract brings another dimension to our extensive S&P 500 Index option complex. Like SPX, SPX Weeklys and SPXpm, Range options provide a unique way for our customers to trade the S&P 500. Each of these products underscores CBOE's commitment to develop new and innovative products that address the diverse needs of investors."

For more information on CBOE S&P 500 Range options, see www.cboe.com/SRO.

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