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Weekly options get tighter strike prices

Chris McKhann (chris.mckhann@optionmonster.com)

As weekly options continue to see huge popularity, the International Securities Exchange has introduced $0.50 strike prices to those contracts.

The Securities and Exchange Commission approved the change, which the ISE put into effect last week. The tighter strike prices apply to the 93 underlyings with weekly option expirations that trade in $1 strike intervals. Yesterday, for example, we saw a large institutional trade in iShares Emerging Markets Fund's September 40.50 calls.

There has long been talk about the need for more expirations and strikes, and that wave is finally coming in. One issue that we will have to keep an eye on is the ability of brokers and exchanges to keep up with the increased quote traffic. That is something that has created problems in the past, especially during moments of crisis.

Innovation in the options world continues unabated, but not all of it has been successful. The CBOE Volatility Index and some related products, such as VIX options, futures, and exchange-traded funds, have been incredibly successful. But other volatility products, including a host of UBS exchange-traded notes, have not gained any traction and were closed today.

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