Index Options & Futures Trading - Dow Jones Industrial
Dow Jones Industrial Average Options
DJX is the symbol for options based on The Dow Jones Industrial Average (DJIA). The DJX index option contract is based on 1/100th (one-one-hundredth) of the current value of the Dow Jones Industrial Average. So, for example, when DJIA is at 11,000, the DJX level will be 110. The DJIA - the index on which the DJX contracts are based--is the oldest (established 1896) continuing U.S. market index, and the DJIA probably is the world's best known stock index to individual investors. Options on the Dow are now available from 7:00 a.m. to 8:15 a.m. Chicago time on the new CBOEdirect screen-based trading system, and also during regular trading hours from 8:30 a.m. to 3:15 p.m.
Dow Jones Index Options Contract Trading
Since their introduction in 1997, DJX options have grown to become some of the most popular index options worldwide, with open interest (as of August 2001) of more than 650,000 contracts, and average daily volume around 30,000 contracts. This popularity leads to four fundamental reasons for using DJX options:
Investors are able to trade a broad market by making one DJX trading decision rather than making the many decisions involved with investing in numerous individual stocks.
DJX options offer a convenient and easy way to help reduce the market risk of a broad market portfolio, without disrupting the make-up of the portfolio.
- Predetermined Risk
DJX option purchasers risk only the premium they pay for the option, plus commissions. The risk is both known and limited.
Purchasing DJX options, instead of buying or selling numerous individual stocks, provides an investor with an additional opportunity to use investment capital elsewhere. For a relatively small percentage gain in the underlying index, a DJX option can increase in value by a multiple of that gain, assuming the correct option series was selected.
Dow Jones Index Options Contracts & Futures Trading Contracts
|Dow Jones Industrial Average||CBOE||Options||DJX|
|Dow Jones Industrial Average LEAPS||CBOE||Options||MUT|
Dow Jones Industrial Average Futures Trading
The CBOT DJ futures trading contract allows a broad sector of market participants to hedge commodity and inflation exposure and achieve portfolio diversification through a standardized futures trading contract. Designed to be a highly liquid and diversified benchmark for commodities as an asset class, the DJ is a unique product that includes energy, grains, oilseeds, metals, soft commodities, and livestock. Unlike other commodity indexes, the DJ emphasizes the economic significance of its components. Calculation of the index relies primarily on liquidity data, as well as production data, to determine its component weightings.
|Dow Jones Industrial Average||CBOT||Futures||ZD/DJ|
|Dow Jones Industrial Average||CBOT||Options on Futures||OZD/DJC|