quarterly options

I did a quick check on them and the info I got says they are designed for hedging needs of institutions. Are they viable as active trading instruments or strictly for the big boys hedging?

 

You can use them, but the liquidity is less and the markets are wide.

mark

 

is there any specific reason one would trade them over the regular monthlies?

 

different expiration date

Mark

 

whats a quarterly option? All I see are the regular mont to month options (ie jan,feb,etc..)

 

A few of the major indexes have options that expire on the last business day of Mar, Jun, Sep and Dec.

Mark

 

The only reason is that they expire on the last day of the month, which can be convenient when you use them to hedge a portfolio and report your positions at the end of the quarter.

 

The quarterlies on the SPX have a European style expiration. You don't have to be concerned about the occasional madness of opening settlement.

Also, as others have observed, they can be illiquid at times. It's best to establish your initial position at a good price because, when closing your position, be prepared to sell at the bid or buy at the ask instead of getting the midpoint. This is not always the case, but it's practical to factor in the worst case scenario.

Good luck.

AZD

 

I'm not sure what you meant here since all SPX options are European style not just quarterlies and all of them go through the same expiration process (the settlement value is calculated on the opening print).

 

Oooops. I meant to say that the quarterlies are NOT European style, but American style expiration.

Not all SPX options are European. The quarterlies are NOT calculated on the open, but the end of day price.

Sorry for any confusion.

AZD