Derivatives exchange Eurex will list seven options on Source ETFs on 1 June 2010.
One contract will be based on the Stoxx Europe Mid 200 Source ETF, while the other six options will be based on the Stoxx Europe 600 Optimised Supersectors Source ETFs covering the sectors banks, basic resources, industrials, oil and gas, telecommunications and utilities.
The launch complements the recently introduced options based on three benchmark index ETFs.
“Sector and size indices have become more important in the asset allocation of institutional investors, which is reflected in the strong asset growth in respective ETFs,” says Peter Reitz (pictured), member of the Eurex executive board. “With this extension of our range of ETF derivatives we will offer ETF and derivatives users innovative means to further fine-tune and manage their investments.”
“Fundamentally, options markets need highly liquid reference assets. This has historically posed a challenge to trading options on European ETFs. We were very pleased when Eurex highlighted the trading volumes in our sector ETFs and suggested to launch options. In the lead up to the launch, client feedback was very positive and we look forward to the start of trading,” adds Source’s chief executive Ted Hood.
The ETF options will be traded in euro, physically settled (American-style) and have maturities of up to 24 months. The contract size will be 100 units.
Nomura will act as a market maker to support liquidity in the order book.
The underlying Source ETFs are listed in the XTF segment, Deutsche Börse’s ETF trading segment.