October 27, 2021 - Cboe has announced that it plans to launch fractional options on the S&P 500 Index, which they are calling "Nanos", in the first-quarter of 2022. Nanos would be 1/100th (1%) of the size of a standard options contract XSP1, the Mini-S&P 500 Index options contract. The contract will be called Nanos S&P 500 and have the ticker symbol 'NANOS'. (Nanos by Cboe trade on Cboe as a micro-option (with 1/100th the value of a standard option) on the Mini-S&P 500 Index, which is 1/10th the value of the S&P 500 Index.)
In today's announcement the Cboe states that the new contract, "answers the growing demand for a simpler, cost-effective way to gain broad exposure to the U.S. equity market....[and will] help simplify the process of trading options, letting traders focus on understanding the market and refining their trading strategies."
The Cboe recognises that he higher price of a standard option contract can be a barrier to entry for retail traders and the smaller size of Nanos, "may help beginners gain confidence as they learn and apply basic trading strategies, utilize simplified analytics when identifying and sizing trades, and continue on a learning path."
"Our goal with Nanos is to use education to inspire and empower new market participants to pursue a sustainable financial future. We believe Nanos are more appropriately sized for retail traders and enable traders to better express their opinions on market movements at a comparatively lower premium price," said Ed Tilly, Chairman, President and CEO of Cboe Global Markets. "Through our Nanos S&P 500 product, we are broadening access to a greater universe of traders who can enjoy the potential benefits options provide, including hedging, asset allocation and income generation strategies."
To complement the launch of Nanos, the Cboe Options Institute plans to offer a new options introductory curriculum tailored to retail traders.
"Cboe Global Markets has a long-standing commitment to education, which better enables all types of investors to access our markets, understand our products and potentially benefit from our solutions," said Rob Hocking, Head of Derivatives Strategy at Cboe. "We are continuously evolving our education programs to offer more retail-centric content through the Options Institute, and we are thrilled to welcome a new generation of investors to options trading with the launch of Nanos."
The Nanos S&P 500 product complements Cboe's exclusive suite of S&P DJI Index options, which include S&P 500® Index (SPX) options, with A.M. and P.M. settled weekly and monthly expiring contracts, Mini-S&P 500 Index (XSP) options (which are one-tenth the size of SPX options), with P.M. settled weekly and monthly expiring contracts, and options on the S&P 500 ESG Index options and certain S&P Select Sector Indices with monthly expiring contracts. The creation of these new smaller contracts will provide market participants with additional tools to execute their U.S. large-cap equity trading strategies. Similar to standard SPX options, Nanos S&P 500 will be structured as European-style options (no early exercise) and cash-settled (no delivery or assignment of shares) at expiration with P.M. settlement. For additional information on Nanos by Cboe, click here.
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