The London Stock Exchange (LSE) will launch the UK’s first weekly options contracts based on the FTSE 100 index.
Set to go live at the end of May, the contracts will expire each Friday of the month and will allow investors to capture sudden volatility changes. The contracts will utilise the new LSE midday intra-day auction.
“We believe the unique characteristics of weekly options on the FTSE 100 will appeal to a wide swathe of UK investors,” said Nicolas Bertrand, head of LSE equity and derivatives markets (LSEDM).
SIG Susquehanna, of the largest European market makers, will act as liquidity provider and provide continuous two-way pricing on the order book.
“As well as providing more precise hedging, weekly options afford investors more direct exposure to events and we tend to see index weekly volumes jump around large macro events,” added Cathal Hardiman, options sales trader, Susquehanna International Securities.
“We will also be providing block size prices and up to date market information about the trading in these products to institutional clients directly via our sales desk.”