ISE Plans to Change Trading System

by OptionsZone Experts | June 13, 2011 2:12 pm

Your intraday options trading[1] update.

ISE Plans to Change Market Maker Trading Rights

The International Securities Exchange (ISE) announced today a proposed rule change that would allow it to give its market making firms greater flexibility when they trade on the exchange.

The ISE said in a press release it has filed a proposal with the Securities and Exchange Commission (SEC) that would give its Competitive Market Makers (CMM) the flexibility to select the options classes they would like to quote. The proposal would also give new traders the opportunity to join the ISE as CMM members.

The SEC must approve the proposal before it can be implemented, the ISE reported. The ISE is an all-electronic exchange that offers options trading on over 2,000 underlying equity, ETF, index, and FX products. The ISE is a wholly owned subsidiary of Eurex, which jointly operated by Deutsche Börse AG and SIX Swiss Exchange AG.

In its current trading system, the CMM has the right to provide quotes for options that are assigned to specific ‘bins.’ The CMM splits up its options products into 10 bins. Under the proposal, the CMM will enter quotes in options symbols that comprise a certain percentage of volume on the exchange.

The new proposal will not impact the rights and obligations of ISE’s Primary Market Makers (PMMs), firms that are assigned to each symbol traded on the exchange. The PMM must provide continuous, two-sided quotes and carry out other responsibilities to maintain an orderly market.

The ISE has been losing market share to the NASDAQ OMX Group (NASDAQ: NDAQ[2]) and the NYSE Euronext (NYSE: NYX[3]). The Nasdaq led the nine options exchanges in May with a 28.8% share of the trading, followed by the Chicago Board Options Exchange (NASDAQ: CBOE[4]) with 24.5% and the NYSE with 23.6%. The ISE saw its share drop to 16.9% compared with 19.5% a year ago.

High Options Volume by Strike

The SPDR S&P 500 (NYSE: SPY[5]) was busy in its SPY Jun 127 Put with 118,000 contracts traded as the contracts was down .12 to 1.17. The SPY Jun 126 Put followed with more than 76,000 contracts traded, down .12 to .79.

The Financial Select SPDR (NYSE: XLF[6]) a major player with the XLF Jun 15 Call down .02 to .11 on more than 72,000 contracts.

The CBOE Volatility Index (CBOE: VIX[7]) saw trading on more than 45,000 contracts on its VIX Jun 20 Call unch at .60.

Find more option analysis and trading ideas at Options Trading Strategies[8].

Stocks/Underlying – Big Daily Change in Option Volume

Timberland (NYSE: TBL[9]) was way up with the stock rising 12.85 to 42.84 and option volume coming in at 1,851, a rise of 1700%. TBL is being bought VF Corp. (NYSE: VFC[10]), owner of North Face, Nautica, Wrangler.

Public Storage (NYSE: PSA[11]) has options trading of 20,648 contracts, a rise of 1400%. PSA goes ex-dividend today.

Merck (NYSE: MRK[12]) trades 253,000 options as the stock rises .30 to 35.37.

Stocks/Underlying – High Option Volume

The SPDR S&P 500 (NYSE: SPY[5]) tops the list with a little over 1 million options traded as it rises .03 to 127.63. The Standard & Poor’s Index Options (CBOE: SPX) is up .45 to 1271.43 and 347,000 options trade.

The iShares Russell 2000 (NYSE: IWM[13]) trades 726,000 options and falls .14 to 77.86.

Altria Group (NYSE: MO[14]) rises .36 to 26.99 and 475,000 options trade.

The CBOE Volatility Index (CBOE: VIX[7]) trades about 192,000 contracts and rises .72 to 19.58.

Burney Simpson is the managing editor of InvestorPlace options pages.

  1. options trading:
  2. NDAQ:
  3. NYX:
  4. CBOE:
  5. SPY:
  6. XLF:
  7. VIX:
  8. Options Trading Strategies:
  9. TBL:
  10. VFC:
  11. PSA:
  12. MRK:
  13. IWM:
  14. MO:

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