There is a new SPX option trading product that just got approval for traders to utilize.
These are 5 Year SPX options – called ‘Super LEAPS’ – which have a length of life of 5 years long as their name implies.
As options continue to grow in popularity and trading volume with options continue to increase – there has been a lot of interest and ‘request’ or ‘need’ for this type of option trading product by individual investors, hedge funds, insurance companies, and such. Traders have been wanting an option product that is longer than the traditional 2 to 3 year length LEAP option – and these new ‘Super LEAPS’ fit the bill.
While this type of longer term trading vehicle might be more appropriate for the bigger players – retail traders might find them useful as well for a variety of reasons. If nothing else, if a retail trader who traditionally trades covered call type of positions with stock – can find a ‘good deal’ using the longest term option that is available – why not utilize the Super LEAP as a stock replacement and then start selling monthly or even weekly options against it.
Another SPX related option trading product – the PM options – have been doing well since recently being released.
This options trading product is similar to the regular SPX options – only they are settled in the PM – the afternoon at close of trading just like other regular stock settlements – instead of in the A.M. as the traditional SPX options do.
Both professional and retail option traders seem to be taking to these new SPX ‘PM’ options – not only due to the PM settlement – but these are also electronically traded – they are 10 X the size of the SPY so they can get ‘more for their money’ when trading them – and there is real growth in the liquidity.
Both of these newer SPX trading products can be used for either hedging purposes or more ‘speculative’ purposes – and of course they can be used in conjunction with a variety of other options and option trading strategies from just playing long calls or puts – to using them as insurance purposes, like a protective put – or in more complex option spreads like iron condors, credit spreads, calendar spreads as well as a variety of weekly options trading strategies.