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CME Group (CME) to Launch Micro-Sized Options on Futures

Zacks Equity Research

CME Group Inc. CME will introduce options on its Micro E-mini S&P 500 and Micro E-mini Nasdaq-100 futures contracts. The new options, following the fulfillment of regulatory approval, is projected to be available for trading by the end of 2020.

E-mini S&P 500 futures and options are based on the underlying Standard & Poor’s 500 stock index. These electronically traded futures contract is one fifth the size of standard S&P futures. E-mini Nasdaq-100 futures contract is $20 x the Nasdaq-100 index and has a minimum tick of 0.25 index points. It offers liquid benchmark contracts to manage exposure to the 100 leading non-financial U.S. large-cap companies that make up the Nasdaq-100. Both E-mini S&P 500 and E-mini Nasdaq-100 futures and options of CME Group are among the most actively traded equity index products in the world.

The launch of Micro-sized options on futures on E-mini S&P 500 and E-mini Nasdaq-100 will provide clients with greater versatility to execute equity trading strategies, scale index exposure up or down or more precisely hedge existing equity portfolio positions.

These new options on futures on these two indices will be 1/10th the size of their E-mini options counterparts. Their listing cycle will comprise five Friday weekly options, three end-of-month options and two quarterly options contracts.

Micro E-mini Equity futures have become the most successful new products since their launch. Across the four indices — S&P 500, Nasdaq-100, Russell 2000 and Dow Jones Industrial Average — 243 million cumulative contracts are traded. Of the total trading volume, 27% originates outside the Unites States and more than 1,55,000 unique accounts have traded these contracts.

CME Group boasts the largest futures exchange globally in terms of trading volume as well as notional value traded. CME group leads with about 90% market share of the global futures trading and clearing services.

Shares of this Zacks Rank #2 (Buy) company have declined 7.4% in the past year against the industry’s increase of 9.3%. Nonetheless, the company’s policy to ramp up its growth profile and capital position should continue to drive shares higher.

Other Stocks That Warrant a Look

Some other top-ranked stocks from the security and exchange sector include MarketAxess Holdings Inc MKTX, Cboe Global Markets Inc. CBOE and Intercontinental Exchange ICE. While MarketAxess sports a Zacks Rank #1 (Strong Buy), Cboe Global and Intercontinental Exchange carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

MarketAxess surpassed estimates in three of the last four quarters, with the average positive surprise being 1.09%.

Cboe Global surpassed estimates in each of the last four quarters, with the average positive surprise being 8.24%.

Intercontinental Exchange surpassed estimates in each of the last four quarters, with the average positive surprise being 4.46%.

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