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What is a Mini-Sized Dow Options?

21/04/2010 by admin

Mini-Sized Dow Options is a highly leveraged index option on a futures contract in which the underlying index is the Dow Jones Industrial Average. The option has a multiplier of five, meaning that the option allows one to buy (for a call) or sell (for a put) up to five times the value of the DJIA. This allows one to profit from the option for a lower price than one would otherwise be able to do. As with all index options, a mini-sized Dow option is settled in cash.A type of option for which the underlying assets are Dow Jones Industrial Average futures contracts. The option has a 5 times multiplier, which means that each option contract on the index controls 5 times the value of the index. This gives the option holder more leverage on his/her investment compared to cash index options at a lower cost. The option is traded on the Chicago Board of Trade.

When purchasing a Mini-Sized Dow Option, the premium paid is 5 times the quoted price and the contract would be exposed to 5x the index value. For example, if the quoted price is 200 for the index value of 10,200, then the premium for the option is $1,000 (5 x 200) and the exposure of the contract is 51,000 index points (10,200 x 5).The Mini-Sized Dow options page enables you to find data for call and put options, with different expiration dates. It provides you info for the strike of the option, its type – call or put, its expiration date, high, low, last and its value.

Filed Under: Future and Options, General Tagged With: forex, Mini-Sized Dow Options, new york stock exchange, options, STOCKS

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