(New throughout, adds comments from CME Group, option traders)
By Frank Tang
NEW YORK, March 20 (Reuters) - U.S. derivatives exchange operator CME Group Inc said on Thursday it will launch shorter-term weekly energy and metal option contracts beginning in April in a bid to boost trading volume.
Chicago-based CME Group said it will launch crude oil, natural gas, gold, silver and copper weekly options on the trading floors and the Globex electronic platform effective Sunday, April 13 for trade date Monday, April 14.
The options, which expire on Fridays, offer participants greater flexibility to manage risk and speculate around major U.S. economic indicators such as the monthly nonfarm payrolls, said Miguel Vias, CME Group's director of metal products.
Vias said the products also offer a new opportunity to arbitrage with the options of the SPDR Gold Trust, the world's largest gold exchange-traded fund. The gold ETF options also expire on Fridays.
"Structurally, they fit a need that the market doesn't have right now," said Vias. "If we start to get volatility in the short term, they offer people a real opportunity to protect themselves and to speculate."
CME Group said the new products are based on the popular weekly options in other asset classes such as interest rates, equities and agricultural products.
In 2012, CME Group also launched short-term gold options, which offer daily expiration five business days forward. Those options are rarely traded due to low interest.
COMEX gold options floor trader Jonathan Jossen said the weekly options could very well boost trading volume for the CME Group because new option products are likely to increase trading flows to its existing monthly options.
The new product could also help the CME Group win market share from the over-the-counter option market, which offers more customized products in terms of duration and strike prices, traders said.
"If it was to catch a following and have open interest and market makers providing liquidity, I would be interested to participate in that market," said Albert Ng, a market maker in COMEX gold options and portfolio manager at Aurum Options Strategies.
(Reporting by Frank Tang; Editing by Peter Galloway, Nick Zieminski and Meredith Mazzilli)
- Commodity Markets
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- CME Group