The Chicago Board Options Exchange (CBOE) and its subsidiary the CBOE Stock Exchange (CBSX) have launched a fully automated execution service for combined option and stock trades through a single electronic platform.
The new functionality will enable the simultaneous execution of both the stock and option legs of any position trade in a one-to-one ratio - all on the same electronic platform.
According to the CBOE, the ability to automate options and stocks in combination will be particularly advantageous for investors executing ‘buy-write’ or ‘married put’ hedging trades, as well as enabling faster executions and the opportunity for price improvement. The system electronically pairs a single option leg with a stock leg in a one-to-one ratio, thereby effectively automating the process of implementing a trading strategy. This new functionality uses on CBOEdirect, CBOE's screen based trading system.
"For options traders executing buy-write or other combined stock and option orders, this new automation creates greater efficiency in the overall execution process," said CBOE chairman and CEO William Brodsky, in a statement. "Creating a means for the electronic execution of these types of trades is the natural extension of our efforts to elevate the strategy's profile and will only serve to foster even greater awareness and use of CBOE's BuyWrite products." ??
“The ability to pair stock and option orders together, in one transaction and on a single platform, not only creates obvious trading efficiencies, but also lowers the cost of multi-asset transactions,” added David Harris, chief executive officer of the CBOE Stock Exchange. "The automation of combined stock and option trades is an important step in our ongoing mission to create trading efficiencies between asset classes and to reduce the overall costs for investors." ???