The folks at the Chicago Board of Trade and Chicago Board Options Exchange won’t let historical happenstance stand in the way of launching a major stock-related enterprise in October.
October has the reputation as a cruel month for the stock market– notably in 1929 and 1987–although Mark Twain observed that investors have as many as 11 others about which to be wary.
On Wednesday the two exchanges disclosed that they will begin trading Oct. 6 in futures and options based on the Dow Jones industrial average. The average is the most widely followed measure of stock market activity and the exchanges are hoping to attract smaller investors who normally shy away from futures and options trading.
In June, Dow Jones & Co., best known as publisher of the Wall Street Journal, licensed the Chicago exchanges to trade the derivative products.
The CBOT plans to list a futures contract valued at $10 times the Dow index. At Wednesday’s close of 8021, the contract would be valued at $80,210. The CBOT will offer options on the futures contract.
At the CBOE, cash-settled options on the Dow will be based on 1/100th of the index level. Thus the Dow at 8021 produces options at 80.21, and a standard multiplier of $100 would mean an underlying value of $8,021.
The CBOE also plans to trade options on the Dow Jones transportation and utility averages. Officials expect more than 100 marketmakers to participate in Dow trading.
