XEO vs OEX and PM

R

RichardRimes

Trying to wrap my mind around PM and different strategies where it may be beneficial I began to look at these two products in which the only difference (it seems) is American vs European exercise. So if your doing spreads you want the XEO so you don't have dangling legs.

HOWEVER I noticed volume on the PUT side of the XEO very slim where as volume on the call side was more than OEX
(at least this Friday and granted it was an up day) however.......having PM wouldn't it make sense to sell call spreads on the XEO and your put spreads or even a naked put on the OEX (since being "put to" is usually easier to manage) ? With PM you would have cross-margining keeping margin costs down and you are able to better to take advantage of "volume skews"?
 
Quote from RichardRimes:


HOWEVER I noticed volume on the PUT side of the XEO very slim where as volume on the call side was more than OEX
(at least this Friday and granted it was an up day) however.......having PM wouldn't it make sense to sell call spreads on the XEO and your put spreads or even a naked put on the OEX (since being "put to" is usually easier to manage) ? With PM you would have cross-margining keeping margin costs down and you are able to better to take advantage of "volume skews"?
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I don't know what site you're looking at that suggests XEO has more call volume than OEX, because I see OEX has 3-5x the volume on the CBOE site.
 
I belive they're both cash settled so getting assigned is just a cash transaction. Of course on the american style anytime you're assigned you'll be left with delta to manage in a cash settled option.

Why are you concerend with the volume? I dont think anyone is going to tax the volume and liquidity of these products.
 
sorry devil I should have been more specific. I was looking at the AUG puts and calls on my trading platform. AUG 710 Puts had 100 contracts & 715 Puts 80...all other contracts (puts) had 0 or may be 1 trade. Where as OEX had 400 at 700, 300 at 705, 900 at 710 (round numbers) and so on. On the call side OEX had less than 100 under the ATM and just not as many above the ATM.

x-flat
The reason the volume is important is simply if there is little or no volume my experience in trading SPX is its much harder to get fills and you really get screwed on the bid/ask when there is little or no volume...so I would assume the same on the OEX/XEO. There is no question that volume/liquidity makes for better fills and faster execution.
 
Between 695 and 735 call volume on XEO was 2405
call volume between those strikes on OEX was 1632...not a huge perhaps but the volume difference on the Put side was rather huge... OEX was again a couple of thousand vs on 181 total between the same strikes on the XEO.

your correct about over all volume because of op exp there is a ton of volume for July...but look at the months farther out
 
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