Changes Coming to CME Gold Options Contracts

10/06/2009 12:01 am EST

Focus: OPTIONS

Effective Sunday, October 11, 2009 (trade date Monday, October 12), the following changes to the listing rules for COMEX gold options will occur:

1) The strike price interval will be set to $5.00

CME Globex strike price increment= 5 increments for all trading months on all venues regardless of the level of the underlying futures prices.  Currently, the strike price interval is dependent on futures price levels as follows: $5.00 (5) if futures prices are under $500; $10.00 (10) if futures prices are between $500 and $1,000; and $25.00 (25) for futures prices above $1,000.

2) In addition, the strike price listing will be expanded from ATM ± 6  to ATM ± 20 strike prices.

This is good news. When gold futures made their most recent foray above $1000 in early September, traders who wanted to enter nimble options positions were stuck with call strikes at $1025, $1050, etc.

Applying a $5 increment makes sense, and should make options on COMEX gold futures more attractive. I wonder whether this decision was made in response to the increasing popularity of options on GLD, the SPDR gold ETF.

By the Staff at CondorOptions.com

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