Three weeks after the Tel Aviv Stock Exchange (TASE) launched options trading on certain individual shares, options on Israel's two largest banks Bank Hapoalim (LSE: BKHD; TASE: POLI) and Bank Leumi (TASE: LUMI) will begin to be traded tomorrow, April 23.
The first individual company on whose share options were traded was Israel Chemicals Ltd. (TASE: ICL), with trade beginning on March 29.
The securities will give the option to buy or sell lots of 1,000 of the underlying shares.
In May, options on Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) shares will be listed.
The options on shares, like Tel Aviv 25 Index options already traded, are European style options, meaning they can only be exercised on the expiration date. American style options can be exercised at any point until the expiration date. The TASE options are cash settled and expire on the same day on which options on the TA-25 Index expire.
The options on shares will be issued with expirations of one, two, three, and six months.
TASE appointed Clal Finance Derivatives and Tradomatix as the two market makers for the options being traded.
When share options were announced, TASE CEO Ester Levanon said, "The development of the derivatives market in Israel is very important for the TASE. Trading in options on shares will contribute to the development of the market, and provides traders with further possibilities to hedge their investments."
Options on shares have been traded in the United States, on the Chicago Board Options Exchange (CBOE), since 1973.
Published by Globes [online], Israel business news - www.globes-online.com - on April 22, 2009
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