- Why is CME Group listing options on Sector futures?
- What are the underlying indices and where can I find the methodology?
- What makes this contract offering unique?
- What is the listing cycle?
- What are American-style options?
- What strike prices are available?
- What are the position limits for these options contracts?
- What are the codes?
- What are the fees?
- Where can I source liquidity for block trades?
- How will CME Group’s clearing house margin these options?
1. Why is CME Group listing options on Sector futures?
Over the last few years open interest in our Equity Index Sector suite has grown to over 250K contracts, and ADV has grown to over 20,000 contracts in 2024 YTD. Active participants in these markets are eager to see more growth with the introduction of options on Sector Index futures.
Coming October 28*
Seven new Sector Options on futures are arriving, providing more capital-efficient ways to capture sector exposure.
*Pending regulatory review
2. What are the underlying indices and where can I find the methodology?
CME Group is initially launching options on six E-mini S&P Select Sector Index futures and options on Dow Jones US Real Estate Index futures:
- E-mini Standard and Poor's Select Sector Stock Energy Index Futures
- E-mini Standard and Poor's Select Sector Stock Financial Index Futures
- E-mini Standard and Poor's Select Sector Stock Health Care Index Futures
- E-mini Standard and Poor's Select Sector Stock Industrial Index Futures
- E-mini Standard and Poor's Select Sector Stock Technology Index Futures
- E-mini Standard and Poor's Select Sector Stock Utilities Index Futures
- Dow Jones U.S. Real Estate Index Futures
View details of the the underlying index methodology:
3. What makes this contract offering unique?
CME Group will provide market participants with the ability to hedge and express their views on equity sectors using these options with all of the capital efficiencies available, such as initial margin and margin offsets against the underlying futures contracts listed at CME Group.
4. What is the listing cycle?
The listing cycle will be quarterly contracts for the next two consecutive quarterly contracts, initially December 2024 and March 2025.
5. What are American-style options?
American-style options can be exercised and assigned at any time up to expiration.
6. What strike prices are available?
At a high level, CME Group is attempting to ease the messaging burden on our liquidity providers while providing clients with the necessary strikes and hedging tools needed to adequately trade in this market. View the strike intervals here.
7. What are the position limits for these options contracts?
The position limits for these options contracts are determined in conjunction with the positions in the underlying futures. View more information on position limits.
8. What are the product codes?
| Underlying Futures | CME Clearport | CME Globex | Underlying Index | Bloomberg Outright |
|---|---|---|---|---|
| E-mini S&P Select Sector Energy Index Futures | XAE | XAE | IXE | IXPA |
| E-mini S&P Select Sector Financial Index Futures | XAF | XAF | IXM | IXAA |
| E-mini S&P Select Sector Healthcare Index Futures | XAV | XAV | IXV | IXCA |
| E-mini S&P Select Sector Industrial Index Futures | XAI | XAI | IXI | IXIA |
| E-mini S&P Select Sector Technology Index Futures | XAK | XAK | IXT | IXTA |
| E-mini S&P Select Sector Utilities Index Futures | XAU | XAU | IXU | IXSA |
| Dow Jones U.S. Real Estate Index Futures | JR | RX | DJUSRE | DJEA |
9. What are the fees?
Options on E-mini S&P Select Sector Index futures are listed on the CME DCM and follow the CME Fee Schedule under the Equity tab. Options on Dow Jones US Real Estate Index Futures are listed on CBOT DCM and follow the CBOT Fee Schedule under the Equity Index Products tab. View the fee schedule.
10. Where can I source liquidity for block trades?
See a list of firms who have indicated they are willing and able to provide pricing for Sector Options on Sector Index futures. The block trade minimum threshold is 20 contracts - subject to a 15 minute reporting window.
11. How will CME Group’s clearing house margin these options?
CME Group’s clearing house will margin these options initially in the SPAN model and they will subsequently be migrated to SPAN 2. CME Group’s clearing house offers an online tool, CME Core, that can assist with margin calculations.
All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
