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Yes I think the other big difference is that the OEX options are cash
index options, meaning that the underlying is the cash index, whereas
the SPX options are related to a futures contract as an underlying.
This makes quite a big difference.
KIMBOLEGSA@xxxxxxx wrote:
> Could someone please help me with the following:
>
> The only differences between the OEX and the SPX of which I am aware
> are:
>
> a). The OEX is based on the S&P 100 and that the SPX is based on the
> S&P 500.
> b). The OEX is an American style option and the SPX is European in
> style.
>
> It this second difference that puzzles me. I thought the only
> difference
> between the two is that American style options can be exercised before
> their
> expiration date, whereas European style options can't.
>
> Is there some other important difference of which I am unaware?
>
> If not, then I am further puzzled.
>
> Most options are never exercised but are repeatedly bought and sold
> during
> their life span. Therefore, I thought that the ability to exercise an
> option
> is only of any use to the 'Commercials' who would eventually want to
> take
> delivery of the underlying.
>
> If the underlying is a tangible asset such as a Stock or Commodity,
> then this
> is an important distinction.
> But as Index options are intangibles and there isn't anything
> underlying of
> which to take delivery, of what use is the ability to exercise before
> expiration?
>
> ……..And another question: I have been monitoring the Put/Call ratios
> between
> the two. Would there be any validity in an observation that the
> 'strong hands'
> use the SPX instead of the OEX to hedge against their S&P 500 Futures
> positions or is this just wishful thinking on my part?
>
> Has anyone who also looks at the relationship between these two
> indices
> extracted any useful conclusions that they would be willing to share?
>
> Many thanks in advance.
>
> Rgds,
>
> Kim.
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