so what is everyone's take on the impact minis will have early on? u figure, there will be alot of call writing and put buying from the average investor who holds 10-90 shares in these equities. is there anything to take away from that? like maybe all that negative delta will forecast a drop in the stock? or should i be selling volatility if i presume demand for minis will be high initially? OR...do u think it's possible there will be some arbitrage opportunities between minis and regulars? perhaps the demand causes minis to become overpriced relative to the regulars....so u sell ten minis and buy one regular....IF this were possible (for all i know i could get struck by lightning twice before ever discovering a legit arbitrage opportunity).....but assuming there was an opportunity...i would have to hold til expiration to achieve my riskless profit, right?
Mini options will be a total dud. Most option volume comes from pros, not retail. There will be no liquidity, it will be like trading mini gold futures or single stock futures, another useless product with no volume adding to the growing list.
+1. re the above poster's question on arb opps, there will be none. re selling mini's to capture perceived high demand, again this will easily be arb'd away (if AAPL mini IV is higher than AAPL reg IV than you sell the former and buy the later). in general, the success rate of new products is very low and it takes a lot to move away from what's already available esp w/ the high liquidity. that's why it will be almost impossible for cme to lose their lead in rates esp eurodollar.
minis could be a total failure, but they could also be a real success. they have been getting a ton of hype. weren't weeklies supposed to flop in the beginning also?
You're suggesting natural demand in the minis will foretell movement in the shares? They are not going to trade (materially) away from the bigs. Figure an 30x70 in the ATM straddle in the bigs, and one handle wide in the minis. The mini market-mid will likely be within a nickel of the mid on the bigs, but much wider. There will be an automated arb-market for these things.
weeklies were a new product in that they were a completely diff time frame as opposed to mini's which are a smaller car size
I use Sterling 8 and they are currently not supporting mini options but here is some info about the minis from ISE.