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- Nasdaq said Thursday it's launching options for its Nasdaq-100 Micro Index.
- The exchange operator said the options are a cost-efficient way for retail investors that want exposure to the large-cap Nasdaq-100 index.
- "Option investor engagement is at an important inflection point," says Nasdaq.
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Exchange operator Nasdaq said Thursday it's reaching for retail investors wanting exposure to the Nasdaq-100 index by launching options on its Nasdaq-100 Micro Index.
The company said the options are cost-efficient and are listed on the Nasdaq PHLX options exchange along with other trading platforms that support index options.
"Option investor engagement is at an important inflection point, with newer participants embracing the options market like never before," said Greg Ferrari, Nasdaq's head of US options, in a statement.
Options can be used by investors to hedge risk or for speculation on which direction an asset will move.
Retail investing is on the rise, with a surge in popularity over the last year when millions of Americans were suddenly forced to work, or look for work, and study at home to curb the spread of COVID-19. Low-cost and zero-commission platforms have fueled the boom.
Retail investors have recently elevated the public profile of shares in a number of companies including video game retailer GameStop, movie-theater chain AMC Entertainment and technology maker Nokia. 15% of current US stock market investors began in 2020, according to a Charles Schwab study released this month.
The large-cap Nasdaq-100 index includes tech behemoths Apple and Amazon as well as shares of Starbucks, Walgreens Boots Alliance and biotech firm Amgen. Nasdaq said the notional size of index options on the Nasdaq-100 can often be out of reach for individual investors.
The Micro Index options represent 1/100th the full value of the Nasdaq-100 index, which the exchange says provides investors with a lower notional entry point.
The Nasdaq-100 index has climbed 61% over the past 12 months. It was slightly lower on Thursday at around 13,919.
Nasdaq said Micro Index options for monthly expirations are available and options for weekly expirations will launch later in May. Additional expiries, including long-term equity anticipation securities, or LEAPS, and Monday and Wednesday weekly expiries, will be added per customer demand. Nasdaq said cash-settlement, European-style expiration, and favorable tax treatment are key benefits of index options.