ETF Futures And Options

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DEFINITION of 'ETF Futures And Options'

A variety of derivative products based on exchange-traded funds. ETF futures are contracts that represent an agreement to buy (or sell) the underlying ETF shares at an agreed-upon price on or before a specified date in the future. ETF options, on the other hand, are contracts that give the holder the right, but not the obligation, to buy (or sell) the underlying ETF shares at an agreed-upon price on or before a specified date in the future. These products are typically used when you adopt a bullish or bearish outlook on the economy or an industry as a whole, over individual stocks.

INVESTOPEDIA EXPLAINS 'ETF Futures And Options'

On March 1, 2011, the CME Group issued a report indicating a delisting of futures on ETFs, specifically, the Nasdaq-100 Tracking Stock, Standard & Poor's Depositary Receipts and iShares Russell 2000 will be delisted following their March 2011 expirations. On March 26, 2012, CBOE Crude Oil ETF Volatility Index security futures (OV) began trading and options on the OVX Index began trading the next month, on April 10, 2012.

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RELATED FAQS
  1. How can I check to see if an ETF’s price reflects its asset value?

    An investor can check the net asset value (NAV) for an exchange-traded fund (ETF) on the website for the ETF after the market ... Read Full Answer >>
  2. Why would a company issue a rights offering?

    Companies most commonly issue a rights offering to raise additional capital. A company may need extra capital to meet its ... Read Full Answer >>
  3. What is the difference between share purchase rights and options?

    There is a big difference between share purchase rights and options. With share purchase rights, the holder may or may not ... Read Full Answer >>
  4. What is the difference between an option-adjusted spread and a Z-spread in reference ...

    Unlike the Z-spread calculation, the option-adjusted spread takes into account how the embedded option in a bond can change ... Read Full Answer >>
  5. In what ways can a sinking fund affect bond returns?

    The effective yield of a bond sinking fund to an investor should not be considered similar to a bond nonsinking fund. Both ... Read Full Answer >>
  6. Can delta be used to calculate price volatility of an option?

    The delta of an option is a component of the Black-Scholes option pricing formula, which provides the implied volatility ... Read Full Answer >>
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