Mini-Sized Dow Options


DEFINITION of 'Mini-Sized Dow Options'

A type of option for which the underlying assets are Dow Jones Industrial Average futures contracts. The option has a 5 times multiplier, which means that each option contract on the index controls 5 times the value of the index. This gives the option holder more leverage on his/her investment compared to cash index options at a lower cost. The option is traded on the Chicago Board of Trade.

BREAKING DOWN 'Mini-Sized Dow Options'

When purchasing a Mini-Sized Dow Option, the premium paid is 5 times the quoted price and the contract would be exposed to 5x the index value. For example, if the quoted price is 200 for the index value of 10,200, then the premium for the option is $1,000 (5 x 200) and the exposure of the contract is 51,000 index points (10,200 x 5).

  1. Chicago Board Of Trade - CBOT

    A commodity exchange established in 1848 that today trades in ...
  2. Index

    A statistical measure of change in an economy or a securities ...
  3. Index Futures

    A futures contract on a stock or financial index. For each index ...
  4. Index Option

    A financial derivative that gives the holder the right, but not ...
  5. Futures Contract

    A contractual agreement, generally made on the trading floor ...
  6. Underlying

    1. In derivatives, the security that must be delivered when a ...
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