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Thursday, January 24, 2013

Options Trader Alert #2013 - 5
NASDAQ OMX Mini Options to Begin Trading on Monday, March 18, 2013

Markets Impacted:

Contact Information:

What you need to know:

  • NOM, PHLX and BX Options will begin trading Mini Options on Monday, March 18, 2013
  • The fees will be announced prior to the start of trading on March 18, 2013

What is being announced?

The NASDAQ Options MarketSM (NOM), NASDAQ OMX PHLX® (PHLXSM) and NASDAQ OMX BX OptionsSM (BX Options) will begin trading Mini Options on Monday, March 18, 2013.

What are Mini Options?

Mini Options are new options classes that will carry a deliverable of 10 shares of an underlying security, versus 100 shares with a standard option deliverable. The strike prices, as well as the bids and offers, will be at the same levels as standard options. Mini Options are separate options classes that will not be eligible for trading in $.01 increments pursuant to the Penny Pilot Program on the first day of Mini Options trading. Similar to other options classes, if the Exchange files to include Mini Options in the Penny Pilot Program, an updated notification will be circulated.

Will Mini Options be included in strike and listing programs?

Mini Options will be included in certain strike (e.g., $1 strike program) and listing programs (e.g. Weeklies), as applicable, because strike prices for Mini Options will match those of standard options. For example, weekly and quarterly strikes will be available for Mini Options, but they may not begin in these programs on the first day of trading. Their inclusion in these programs will be announced closer to the start date.

How will Mini Options be designated?

Mini Options will be differentiated with a suffix of "7". For example, Mini Options will be designated as "AAPL7" or "SPY7."

Will Mini Options be available on all options symbols?

Initially, Mini Options will overlay the following symbols: AAPL, AMZN, GLD, GOOG and SPY ("Mini Options Symbols"). As stated above, Mini Options will be separate and distinct options classes from standard options and, therefore, the exchanges will appoint specialists specifically for Mini Options pursuant to exchange rules. The following specialists have been appointed pursuant to PHLX Rules:

  • AAPL7 - Susquehanna Securities
  • AMZN7 - Timber Hill LLC
  • GLD7 - Wolverine Trading
  • GOOG7 - Morgan Stanley
  • SPY7 - Citadel Securities

How will the exchange determine strike prices and expiration dates?

Strike prices for Mini Options will have the same strike price intervals as standard options. Mini Options will also have the same expiration dates as standard options.

While bids and offers for Mini Options will be at the same levels as standard options, premiums will be 1/10th the value of a standard option contract.

For more information on standard options vs. Mini Options, please refer to the Mini Options FAQ document on the NASDAQ Trader® web page.

What are my quoting obligations as a market maker for Mini Options?

The prevailing quoting obligations for standard options will apply to Mini Options, but the obligations shall be mutually exclusive and would not be accumulated. Please refer to the following applicable exchange rules: PHLX Rule 1014, NOM Chapter VII, Section 5 and BX Options Chapter VII, Section 5.

Similar to the process for standard options, an approved Market Maker on PHLX, NOM or BX Options who desires to submit quotations in a Mini Options should notify NASDAQ OMX Market Operations by sending an email to the following:

What are the fees associated with Mini Options?

The fees will be announced prior to the start of trading on March 18, 2013.

Where can I find additional information?


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