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Sounds about right. European style expiration means you can only EXERCISE
at expiration. You can still trade the options which means you can buy
back or close positions in case the market (gasp!) turns against you. For
indexes like the OEX and SPX the exercise is settled in cash.
- Hacker
On Wed, 10 Jun 1998 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?
Dark Hacker | Hacker and Fortress web mechanic
The Guardians Of Computation | Fortress Of Computation
mail: hacker@xxxxxxxxxxxxxxx | web: http://www.computation.com/pub/hacker/
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