Hong Kong Exchanges and Clearing Limited (HKEx) announced today (Thursday) that the Securities and Futures Commission has approved the proposed rule amendments for the narrowing of strike intervals in HKEx’s stock options market. The changes will be applied to the Strike Interval Group B in Table 1 from 2 November 2009.
Strike Interval Group B now applies to seven stock option classes and there are 10 stock option classes with an additional calendar quarter expiry month for trading. From 2 November 2009, the revised Strike Interval Group B will apply to 20 of the most actively traded stock option classes and Tracker Fund options and all 21 of those stock option classes will have an additional calendar quarter expiry month (see Table 2 below).
The majority of stock option classes will continue to have five expiry months: spot, or current month, the next two calendar months and the next two calendar quarter months (calendar quarter months comprise March, June, September and December). For those with the third calendar quarter month, the expiry months in November 2009 will be: November 2009 (spot), December 2009 and January 2010 (the next two calendar months), and March 2010, June 2010 and September 2010 (the next three calendar quarter months).
“The changes will give market participants more choices,” Calvin Tai, HKEx’s Head of Derivatives Market, said. “Market participants will be able to find a stock option with a strike price close to the underlying stock’s price more easily after strike intervals have been narrowed. Moreover, the addition of a third calendar quarter expiry month will allow market participants to trade longer maturity in the 21 stock option classes and may result in more trading activity.”
Stock options are the most actively traded product in HKEx’s derivatives market. In the first nine months of this year, the 35,828,701 stock options contracts traded in the market represented about 48 per cent of the total trading volume.
Table 1: Strike Interval Groups for Stock Options from 2 November 2009