NYSE Launches Mini-Options on Precious Metals to Tap Demand

-9.36%
Downside
45.29
Market
41.05
Trefis
NYX: NYSE Euronext logo
NYX
NYSE Euronext

NYSE Euronext (NYSE:NYX) has successfully launched mini-sized options on gold and silver futures contracts in an effort to tap the growing demand for metal trades among retail customers and hedge funds. Gold is primarily traded in the physical market and most speculators and small investors access it via exchange traded funds. Exchanges such as NYSE Euronext, CME Group (NASDAQ:CME) and Nasdaq OMX (NASDAQ:NDAQ) are now introducing new derivatives contracts on precious metals. [1]

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See our full analysis for NYSE Euronext

The mini-sized options contracts, which represent a delivery of 33.2 ounces of gold or 1,000 ounces of silver, were launched by NYSE in order to help smaller customers with options trading on precious metals and meet the rising demand of these markets. These contracts provide traders the flexibility by offering them multiple trading strategies. They also enhance risk management efficiency and strengthen the fundamentals and liquidity of the futures market for precious metals.

NYSE is looking to expand its derivatives businesses through the acquisition of London Metal Exchange (LME) for which it has submitted its bid along with the CME Group and IntercontinentalExchange (ICE). [2]

We have a price estimate of $33.84 on NYSE Euronext’s stock, about 10% above its current market price.

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Notes:
  1. NYSE Euronext launches gold and silver options, Feb 27, 2012, FT []
  2. CME, NYSE Euronext, ICE submit bids for LME -FT, Feb 16, 2012, Reuters []