Large option contract sizes in Oz?

matty2.0 · 9 August 2009

So I'm used to trading options overseas ... in the US and Europe.
Just seeing some opportunities here in Oz ... but then I realize that 1 contract is for 1000. Why don't they set it at 100? like in the US? You'll never get a market going.

oh and btw ... i tend to write, so margin requirements will be huge for Oz options ... e.g. RIO underlying at $60!!!

Is there a reason for such large contract sizes? Or does anyone else think it's illogical too?

Thanks in advance.

Largesse · 9 August 2009

matty2.0 said:
So I'm used to trading options overseas ... in the US and Europe.
Just seeing some opportunities here in Oz ... but then I realize that 1 contract is for 1000. Why don't they set it at 100? like in the US? You'll never get a market going.

oh and btw ... i tend to write, so margin requirements will be huge for Oz options ... e.g. RIO underlying at $60!!!

Is there a reason for such large contract sizes? Or does anyone else think it's illogical too?

Thanks in advance.

hey matty2.0,

what are you an analyst of again?

i couldn't find your response to my last query.

matty2.0 · 9 August 2009

Largesse said:
hey matty2.0,

what are you an analyst of again?

i couldn't find your response to my last query.

Geez christ ... I'm an equities analyst. There ... happy?

With all due respect, but ... you need to get out a bit.

So can you offer an opinion to my query? or are you just gonna be immature?

cutz · 9 August 2009

matty2.0 said:
So I'm used to trading options overseas ... in the US and Europe.
Just seeing some opportunities here in Oz ... but then I realize that 1 contract is for 1000. Why don't they set it at 100? like in the US? You'll never get a market going.

oh and btw ... i tend to write, so margin requirements will be huge for Oz options ... e.g. RIO underlying at $60!!!

Is there a reason for such large contract sizes? Or does anyone else think it's illogical too?

Thanks in advance.

Nah,

There's nothing wrong with contract size over here, just gotta get used to dealing with smaller lots, it all evens out.

BTW, i read a discussion paper somewhere regarding the ASX looking at splitting the lots into 10, hopefully they drop the idea.

matty2.0 · 9 August 2009

Correct me if I'm wrong, but to maintain margin on something like RIO, if you sell naked ... it would be comparable to making a down payment on a house for a mortgage ...

Largesse · 9 August 2009

so you have a degree?
and you are gainfully employed as an equities analyst?
but you ask straight out dumb questions like this?
right......

actually, on re-read, it's not even a question, just a whinge.

cutz · 9 August 2009

Come on boys calm down,

Matty,

I can't really see you point, if you're dealing with smaller multipliers you end up laying on more contracts so it all evens out.

matty2.0 · 9 August 2009

cutz said:
Come on boys calm down,

Matty,

I can't really see you point, if you're dealing with smaller multipliers you end up laying on more contracts so it all evens out.

Okay, let me try that again.
Total margin maintenace for RIO if you were to go naked, would be 1 contract = 50-60K ... at current prices.
1 is the smallest "multiple" ...

NeuromanceR · 9 August 2009

matty2.0 said:
Is there a reason for such large contract sizes?

Might have to ask the ASX about this.

cutz · 9 August 2009

matty2.0 said:
Okay, let me try that again.
Total margin maintenace for RIO if you were to go naked, would be 1 contract = 50-60K ... at current prices.
1 is the smallest "multiple" ...

Actually matty,

Min margin requirement for an ATM sept expiry RIO naked put is about $14602, lifted off the ASX website. http://www.asx.com.au/opc/OpcStart

NeuromanceR,

Bigger contracts may have something to do with the fact that the face values of aussie stocks have historically been smaller than their US counterparts.

Largesse · 9 August 2009

matty2.0, i seriously feel sorry for your employer.

mazzatelli · 9 August 2009

matty2.0 said:
So I'm used to trading options overseas ... in the US and Europe.
Just seeing some opportunities here in Oz ... but then I realize that 1 contract is for 1000. Why don't they set it at 100? like in the US? You'll never get a market going.

oh and btw ... i tend to write, so margin requirements will be huge for Oz options ... e.g. RIO underlying at $60!!!

Is there a reason for such large contract sizes? Or does anyone else think it's illogical too?

Thanks in advance.

If you trade in US, you will no doubt come across some large tickers e.g. GOOG, GS, AAPL etc

5 contracts can leave you with large margin requirements [assuming Reg T].
Shouldn't be anything different with ASX ETO's, I can't see what the problem is unless you tend to trade in smaller size e.g. 1 contract

Largesse: yes I remember the credit spread thread

matty2.0 · 9 August 2009

cutz said:
Actually matty,

Min margin requirement for an ATM sept expiry RIO naked put is about $14602, lifted off the ASX website. http://www.asx.com.au/opc/OpcStart

NeuromanceR,

Bigger contracts may have something to do with the fact that the face values of aussie stocks have historically been smaller than their US counterparts.

you'll need to be a bit more accurate with the margin interval ... it can reach up to 50%+ for commodities ... put the negative sign in front of the number of contracts b/c it's naked. it comes up to about 30K+. for long dated contracts.

cutz · 9 August 2009

matty2.0 said:
you'll need to be a bit more accurate with the margin interval ... it can reach up to 50%+ for commodities ... put the negative sign in front of the number of contracts b/c it's naked. it comes up to about 30K+. for long dated contracts.

Dude,

I thought we were talking about aussie stock options and the multiplier of 1000, there aren't any commodity options trading on the ASX, if the margin requirement is too big for you on on RIO, try BHP.

Disclaimer.>> Not a recommendation to short BHP naked puts, , i personally wouldn't, even if i were thinking yeah i wouldn't mind owning some, cos those feelings quickly dissipate when a stock is getting trashed.

matty2.0 · 9 August 2009

yeah arlight.
I'm just ranting. i usually just put bhp/rios in the "commodities' bucket. sorry if my terminology is wrong.
thanks anyways. apprecaite it.

Large option contract sizes in Oz?

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