From Todd Wilemon:

Do you suffer from click fatigue? We have exciting news for you. As always we strive to make our clients’ lives easier in big and small ways. I have two new web addresses to add to your favorites on your web browsers that will alleviate your fatigue and get you where you need to be more quickly – sort of like taking the express train!

Drum roll please Charlie. Charlie? Hmm, one day I will get sound effects on this blog!

With no further ado, I would like to introduce two new “vanity URL’s”: www.nysearcaoptions.com and www.nyseamexoptions.com.

What is a “vanity URL” you ask? I will make a deal with you. Send me a dozen farm-fresh eggs and a note explaining what URL stands for and I’ll…just kidding!

These new web addresses will take you directly to your favorite option exchange portals at NYSE.com. No longer is there need to make numerous mouse clicks to find links that contain loads of useful information about our options exchanges.

These remind me of vanity license plates but are better. With vanity plates you have to phonetically sound out what the license plate is trying to convey. Not our addresses—we have spelled it all out for you!

The URL’s are easy to remember. Even if your once-steel-trap mind has turned into a stainless steel whisk (it’s ok, we’re all friends here), you’ll be able to remember www.nysearcaoptions.com and www.nyseamexoptions.com. (If I can do it anyone can!)

So, for example, any time you need to check and see if the ETF option you are trading has a 4:00 p.m. or 4:15 p.m. close, just type www.nyseamexoptions.com or www.nysearcaoptions.com into the web browser and be transported straight to the options exchange page where you can click once and find out the closing time. That’s two clicks total. Easy as pie. Want to catch a webinar you couldn’t attend in real time? Yup. Two clicks. It might be a small change compared to some of the other stuff we’re up to, but clicks add up. Say no to click fatigue and bookmark these links!

We might have to start wearing sunglasses around here, these URL’s are so cool. See you at www.nysearcaoptions.com or www.nyseamexoptions.com.

Trade ‘em Up!

TW

From Todd Wilemon:

Pop the cork on a bottle of Champagne!

NYSE Arca and NYSE Amex Options have successfully migrated to NYSE Euronext’s Universal Trading Platform. I bet you didn’t even notice the migration, did you?

The year 2010 is turning out to be the year of the behind-the-scenes moves and improvements that you do not see happen and barely notice the change when they are fully implemented. Remember OSI?

Vaguely Todd…help me out now…OSI….

Option Symbology Initiative replaced the old month and strike codes with the explicit details of strike and expiration. Took almost five years, a lot of Saturdays spent testing, and it was a huge success. A direct outgrowth of this effort was the creation of “Short Term Option Series” — STOS or as I like to call them, “short termers.” NYSE Euronext was the exchange group that launched these fancy short termers (just to give where credit is due…I am not bragging.) NYSE Amex Options was the first exchange to trade them, followed by NYSE Arca Options…now you know.

You have been trading the short termers haven’t you? They are big. Volume is substantial and markets are liquid and they are a great tool to use for shorter time horizons…you only buy the time you need or sell the time period when time decay accelerates. Use short termers for leverage by buying them, or sell them to capture a volatility crash.

Universal Trading Platform is another huge undertaking that happened behind the scenes and with very little disruptions. NYSE Euronext had technology people in seven cities across the globe working on this project. A shout out to our wonderful tech people, “great job!” Do people still do shout outs?

The platform is the next generation of trading technology. (I know, next generation of technology is already here, time sure is flying fast.) “With common connectivity and market data protocols, as well as trading engine technology that leverages a harmonized code base supporting market specific trading algorithms and structure, the Universal trading Platform provides everything a diverse customer base needs; feature-rich functionality, superior technology and greater cost effectiveness.” (NYSE Euronext press release July 7, 2010)

“The increased performance benefits, both in terms of latency and capacity, of the Universal Trading Platform will have a noticeable effect on our customers’ trading experience,” said Ed Boyle, Executive Vice President, head of U.S. Options. “We are pleased to leverage NYSE Euronext’s extraordinary technology assets to enable us to implement new products and services more efficiently to continue to better serve our customers and improve our markets.”

Universal Trading Platform is a sign of not only NYSE Arca and Amex Options commitment to providing leading-edge technology to our clients but every market center and division of NYSE Euronext has that same commitment. Also, we are not finished with the behind the scenes upgrades. Next up…Mahwah!

Mahwah you ask? What rock have you been hiding under? Oh wait, sorry, that’s me not you…

Mahwah is the huge, brand-spanking-new U.S. Liquidity Center for NYSE Euronext located in Mahwah, N.J. This is the new data center where our matching engines will be located, running the fabulous Universal Trading Platform. Increased speed and throughput with lower and lower latencies, that is where we are headed.

Trade ‘em Up!

TW

Hey, you options traders on NYSE Arca and NYSE Amex, the excellent Amy Farnstrom and Todd Wilemon will be talking with you this afternoon — via webcast — about important changes and refinements in current and upcoming releases on both exchanges.

It will be today, 8 July at 4:30 Eastern/3:30 Central/1:30 Pacific. So you can get through the close, mellow out for a few minutes, and then get your thinking caps back on and log in a few minutes before the presentation starts.

The registration is here. Here are the topics they’ll cover:

• Short term options series (STOS)
• New Rules for Rejects on Market Orders
• Hear about Changes to Customer Priority
• Learn about Configurable Collars
• Tag 439 – FIX Drop Copy explained
• Expansion of FLEX Options

There will be an opportunity to ask questions throughout the presentation.

If you can’t make it, a replay will be available on the NYSE Amex and NYSE Arca options websites.

See you on the web!

Today in NYSE History — July 8, 1932 — The Dow Jones Industrial Averge closed at 41.22 — its lowest level during the Great Depression.

No, I was NOT on the trading floor that day, you comedians.

From Todd Wilemon:

Two expiration days in the same week???? Yes, as a matter of fact, it is happening this very week! Two expiration days, one on Wednesday and the other on Friday.

“Now wait a minute Todd,” you are saying, “The third Friday has come and gone this June…how can there be even one, let alone two expiration days this week?”

Well, the June quarterly options expire on June 30th, the end of the month. “OK,” you say, “that’s one expiration, but you said there were going to be two expiration days this week.”

Here’s where the second expiration comes in…..drum roll please….The short-term options series (STOS) or “short termers” expire Friday. Yes, the times they are a-changing.

You have heard about Short Term Option Series haven’t you? They are the next, new, big, best thing. They might not be in the same category as sliced bread or free beer and pizza, but these short termers are going to be big.

So how do these STOS or short termers work?

Each week NYSE Options will add Short Term Option Series that expire the following Friday (except for those instances when the following Friday is Expiration Friday—i.e. the third Friday of the month). If the following Friday is an Exchange holiday, the STOS will expire on the Thursday preceding the holiday. Additionally, if a given Friday is an Exchange holiday, Short Term Options will be added for trading on Thursday, to expire the following Friday. Whew. Say THAT three times fast!

These options will be subject to exercise by exception processing at the OCC and expiring contracts will be handled in a manner consistent with current quarterly options series processing.

These short termers are great for a variety of reasons. Since they exist for only a week, the time value or theta (time decay) component of the option will be smaller. They are a good way to hedge short term volatility risk because you only have to pay for the volatility and time that you need. You can mitigate risk on upcoming event without the added theta or time costs involved in longer time period options. Whether it would be a Fed announcement or an economic report being released, short termers are an innovative product to use to trade either as a hedge or to gain short term leverage when speculating on a move in the market or a particular issue.

NYSE Amex Options first listed STOS for trading on June 4, 2010. After only three days of trading, open interest was more than 249,000 contracts. Trading volume indicates robust activity, and why not? The chosen issues for this program are some of the most active names:

On NYSE Amex Options, we are trading five ETFs: SPY, QQQQ, IWM, EEM and GLD.

On NYSE Arca Options, we are trading four equity names: AAPL, BAC, BP and C. Also, we are trading one ETF – XLF.

We have a wide range of products for investors…everything from regular options that expire the third Friday of each month…quarterlies that expire every quarter: March, June, September and December… long-term options that expire a year or more in the future and now short-term options that expire after a week… Just more tools ready at hand for your trading success!

The reason we can have so many different length options is a direct result of the Option Symbology Initiative. With the advent of explicit details in the option symbol — explicit being the actual expiration date — we have the ability to list, trade and clear options with a variety of expiration dates in the same underlying and same month. Because of the hard work of option exchanges, OCC and member firms who put in the weekends to get OSI implemented and functioning we reap all get to reap more benefits, more of the time.

So, I look forward to seeing you trading these sort-tTerm option series. As always, if you have any questions, drop Amy Farnstrom, Peter G. Armstrong or me a line and we will be happy to answer your questions!

Trade ‘em up!

TW

From Todd Wilemon:

Two expiration days in the same week???? Yes, as a matter of fact, it is happening this very week! Two expiration days, one on Wednesday and the other on Friday.

“Now wait a minute Todd,” you are saying, “The third Friday has come and gone this June…how can there be even one, let alone two expiration days this week?”

Well, the June quarterly options expire on June 30th, the end of the month. “OK,” you say, “that’s one expiration, but you said there were going to be two expiration days this week.”

Here’s where the second expiration comes in…..drum roll please….The short-term options series (STOS) or “short termers” expire Friday. Yes, the times they are a-changing.

You have heard about Short Term Option Series haven’t you? They are the next, new, big, best thing. They might not be in the same category as sliced bread or free beer and pizza, but these short termers are going to be big.

So how do these STOS or short termers work?

Each week NYSE Options will add Short Term Option Series that expire the following Friday (except for those instances when the following Friday is Expiration Friday—i.e. the third Friday of the month). If the following Friday is an Exchange holiday, the STOS will expire on the Thursday preceding the holiday. Additionally, if a given Friday is an Exchange holiday, Short Term Options will be added for trading on Thursday, to expire the following Friday. Whew. Say THAT three times fast!

These options will be subject to exercise by exception processing at the OCC and expiring contracts will be handled in a manner consistent with current quarterly options series processing.

These short termers are great for a variety of reasons. Since they exist for only a week, the time value or theta (time decay) component of the option will be smaller. They are a good way to hedge short term volatility risk because you only have to pay for the volatility and time that you need. You can mitigate risk on upcoming event without the added theta or time costs involved in longer time period options. Whether it would be a Fed announcement or an economic report being released, short termers are an innovative product to use to trade either as a hedge or to gain short term leverage when speculating on a move in the market or a particular issue.

NYSE Amex Options first listed STOS for trading on June 4, 2010. After only three days of trading, open interest was more than 249,000 contracts. Trading volume indicates robust activity, and why not? The chosen issues for this program are some of the most active names:

On NYSE Amex Options, we are trading five ETFs: SPY, QQQQ, IWM, EEM and GLD.

On NYSE Arca Options, we are trading four equity names: AAPL, BAC, BP and C. Also, we are trading one ETF – XLF.

We have a wide range of products for investors…everything from regular options that expire the third Friday of each month…quarterlies that expire every quarter: March, June, September and December… long-term options that expire a year or more in the future and now short-term options that expire after a week… Just more tools ready at hand for your trading success!

The reason we can have so many different length options is a direct result of the Option Symbology Initiative. With the advent of explicit details in the option symbol — explicit being the actual expiration date — we have the ability to list, trade and clear options with a variety of expiration dates in the same underlying and same month. Because of the hard work of option exchanges, OCC and member firms who put in the weekends to get OSI implemented and functioning we reap all get to reap more benefits, more of the time.

So, I look forward to seeing you trading these sort-tTerm option series. As always, if you have any questions, drop Amy Farnstrom, Peter G. Armstrong or me a line and we will be happy to answer your questions!

Trade ‘em up!

TW

From Todd Wilemon:

“Trading options is one of the all time suckers’ bets.”

“Options are always riskier than the underlying stock.”

We see these misconceptions and many others reported in the press and sold in expensive courses that allege to teach people how to trade options using a “silver bullet” one-size-fits-all trading strategy. While everyone is entitled to an opinion, they are not entitled to make up facts. If options were a sucker bet, wouldn’t the trading of listed exchange traded options have ceased a long time ago? You would figure that if the stove was hot every time, at some point even the dimmest among us would stop touching it. Rather than a sucker’s bet, the intelligent use of options is anything but gambling, so long as you understand that listed exchange-traded options have different risk characteristics than stocks. This does not mean they are inherently dangerous to average investors.

Before anyone is allowed to trade options in a brokerage account, they must affirm that they have read Characteristics and Risks of Standardized Options. This informative booklet is put out by the Options Clear Corporation (OCC) and is known as the options disclosure document.

Understand that trading options is not for all investors. Traders and investors who take the time to read Characteristics and Risks of Standardized Options and to educate themselves can find trading options a definite advantage. And this pamphlet is only the tip of the iceberg when it comes to quality, unbiased and free information that is available to the nascent options user. The Options Industry Council (www.optionseducation .org) is one excellent source for this type of educational content. Several brokerage firms also offer free educational materials to their clients at no cost. Give it a try! You will be glad you did.

So, let’s back up a minute. Why would anybody want to trade options?

In a universe where you can only buy a stock, sell a stock or invest your money in an interest-bearing instrument, investors would have limited choices. Standardized options give investors, well…options! They give you more ways to implement and profit from your market research. Also, when combined with a “classic” investment portfolio of cash, stocks and bonds, options can, in fact, improve returns and reduce risk.

Options give you a way to change the risk versus reward of buying and selling stocks. Options can be used to reduce risk on an individual stock or portfolio wide. Purchasing puts, which grants the buyer the right to sell a stock or exchange traded fund (ETF) at a certain price and within a certain time frame, helps investors protect capital invested in stocks by hedging down-side risk. Investors can either buy puts or buy a bearish put spread to protect capital invested in stocks, or take a speculative (bearish) position on the market with only the predefined risk of the purchase price of the put option rather than the unlimited risk and uncertainty of shorting a stock

Options also allow investors the opportunity to gain from the upward or downward movement in stocks. If your research has identified a stock that you believe is going to have price appreciation, you can buy the stock — or buy calls, which is the right to buy a stock or ETF at a certain price within a certain time. By buying the calls or a bullish call spread, you can participate in the profit potential of the stock going higher without having to actually tying up all your capital in the stock purchase. If puts can be seen as insurance against a downturn in the market, calls can be looked as “upside” insurance.

From these two very basic strategy “tools,” the dedicated options student can build up a very robust portfolio of strategies suitable for varying market conditions.

Remember, options are a wasting asset. They ”live” for only a specified time period. The option buyer or seller needs to be right on both the movement and time period for their selected strategy to pay off. However, no one is ever “locked in” to an options position. Options trade all day every day and because – at least at NYSE options exchanges — market makers are required to provide two-sided markets in all series, there is generally plenty of liquidity to move into or out of a position should your opinion about price or timeframe change. Once again, knowledge and discipline are the keys to success.

Another common use of options by everyday investors and money managers is to write covered calls on existing stock holdings. That just means the person is selling calls against a long stock position. This strategy increases the income generated in your investment account. This strategy could cause you to have your long stock called away if the stock rises above the strike price of the calls sold. This is the tradeoff. Like every trading strategy, this is not a one-size-fits-all solution for every market condition. If you attend an OIC seminar or visit educational websites, it is clearly stated (to say the least) that this strategy is suitable for mildly bullish market forecasts, and it does NOT provide any real downside protection. It is the responsibility of every individual, whether a “buy and hold” investor or “active trader,” to understand their own investment objectives, and what type of investing or trading is truly suitable for his or her level of capitalization, experience, and risk tolerance.

Options strategies are tools. The investor or trader who has done their homework and built up a wide range of tools will have much more flexibility and be better able to respond to changing market conditions in a dynamic yet disciplined way. Sometimes a hammer is the right tool. Sometimes you need a pair of tweezers, and if you show up with the hammer every single time, you are going to get a black eye.

One last point needs to be emphasized. Options are not for the lazy, uneducated or unmotivated investor. Before trading options, please educate yourself. A great website to gain education is…ours! Please go here. If you want to hear more option myths put to bed, I did an informative webcast where I demolished 22 option myths. Please go here and select Options Myths.

Trade ‘em up!

TW

From Todd Wilemon:

“Trading options is one of the all-time suckers’ bets.”

“Options are always riskier than the underlying stock.”

We see these misconceptions and many others reported in the press and sold in expensive courses that allege to teach people how to trade options using a “silver bullet” one-size-fits-all trading strategy. While everyone is entitled to an opinion, they are not entitled to make up facts. If options were a sucker bet, wouldn’t the trading of listed exchange traded options have ceased a long time ago? You would figure that if the stove was hot every time, at some point even the dimmest among us would stop touching it. Rather than a sucker’s bet, the intelligent use of options is anything but gambling, so long as you understand that listed exchange-traded options have different risk characteristics than stocks. This does not mean they are inherently dangerous to average investors.

Before anyone is allowed to trade options in a brokerage account, they must affirm that they have read Characteristics and Risks of Standardized Options. This informative booklet is put out by the Options Clear Corporation (OCC) and is known as the options disclosure document.

Understand that trading options is not for all investors. Traders and investors who take the time to read Characteristics and Risks of Standardized Options and to educate themselves can find trading options a definite advantage. And this pamphlet is only the tip of the iceberg when it comes to quality, unbiased and free information that is available to the nascent options user. The Options Industry Council (www.optionseducation .org) is one excellent source for this type of educational content. Several brokerage firms also offer free educational materials to their clients at no cost. Give it a try! You will be glad you did.

So, let’s back up a minute. Why would anybody want to trade options?

In a universe where you can only buy a stock, sell a stock or invest your money in an interest-bearing instrument, investors would have limited choices. Standardized options give investors, well…options! They give you more ways to implement and profit from your market research. Also, when combined with a “classic” investment portfolio of cash, stocks and bonds, options can, in fact, improve returns and reduce risk.

Options give you a way to change the risk versus reward of buying and selling stocks. Options can be used to reduce risk on an individual stock or portfolio wide. Purchasing puts, which grants the buyer the right to sell a stock or exchange traded fund (ETF) at a certain price and within a certain time frame, helps investors protect capital invested in stocks by hedging down-side risk. Investors can either buy puts or buy a bearish put spread to protect capital invested in stocks, or take a speculative (bearish) position on the market with only the predefined risk of the purchase price of the put option rather than the unlimited risk and uncertainty of shorting a stock

Options also allow investors the opportunity to gain from the upward or downward movement in stocks. If your research has identified a stock that you believe is going to have price appreciation, you can buy the stock — or buy calls, which is the right to buy a stock or ETF at a certain price within a certain time. By buying the calls or a bullish call spread, you can participate in the profit potential of the stock going higher without having to actually tying up all your capital in the stock purchase. If puts can be seen as insurance against a downturn in the market, calls can be looked as “upside” insurance.

From these two very basic strategy “tools,” the dedicated options student can build up a very robust portfolio of strategies suitable for varying market conditions.

Remember, options are a wasting asset. They ”live” for only a specified time period. The option buyer or seller needs to be right on both the movement and time period for their selected strategy to pay off. However, no one is ever “locked in” to an options position. Options trade all day every day and because – at least at NYSE options exchanges — market makers are required to provide two-sided markets in all series, there is generally plenty of liquidity to move into or out of a position should your opinion about price or timeframe change. Once again, knowledge and discipline are the keys to success.

Another common use of options by everyday investors and money managers is to write covered calls on existing stock holdings. That just means the person is selling calls against a long stock position. This strategy increases the income generated in your investment account. This strategy could cause you to have your long stock called away if the stock rises above the strike price of the calls sold. This is the tradeoff. Like every trading strategy, this is not a one-size-fits-all solution for every market condition. If you attend an OIC seminar or visit educational websites, it is clearly stated (to say the least) that this strategy is suitable for mildly bullish market forecasts, and it does NOT provide any real downside protection. It is the responsibility of every individual, whether a “buy and hold” investor or “active trader,” to understand their own investment objectives, and what type of investing or trading is truly suitable for his or her level of capitalization, experience, and risk tolerance.

Options strategies are tools. The investor or trader who has done their homework and built up a wide range of tools will have much more flexibility and be better able to respond to changing market conditions in a dynamic yet disciplined way. Sometimes a hammer is the right tool. Sometimes you need a pair of tweezers, and if you show up with the hammer every single time, you are going to get a black eye.

One last point needs to be emphasized. Options are not for the lazy, uneducated or unmotivated investor. Before trading options, please educate yourself. A great website to gain education is…ours! Please go here. If you want to hear more option myths put to bed, I did an informative webcast where I demolished 22 option myths. Please go here and select Options Myths.

Trade ‘em up!

TW

From Todd Wilemon:

Hey friends, just a quick note to clarify the new fee schedules that NYSE Euronext has implemented on both of our option exchanges.

This really is the case where the Big Print giveth and the Small Print… giveth even more!

Let’s get right to it. On NYSE Arca options we introduced some new tiers that reward and incentivize both our customers that take liquidity and also those market makers that post liquidity. This is known as a win-win situation.

The first new tier was the “Premium Tier.” For those 15 Penny Pilot Issues, we increased the posting credit by $0.05. It is an additional credit.
• Electronic Customers and Electronic Broker Dealers who were getting $0.25 to post liquidity now receive $0.30
• Market Makers who were receiving $0.30 now will receive $0.35
• To be clear, this applies to the 15 Premium Tier Issues. To get the list of Premium Tier names, you can go to this blog post or to the notice.

For all other penny pilot names, we created “Customer Take Discount Tier” and a “Market Maker Post Credit Tier.”

Let’s talk about the “Customer Take Discount Tier” first. This rewards and incentivizes our customers who take liquidity. If you reach certain volume levels we will give you a discount on taking liquidity. If you are a customer and your take volume is under 1 million contracts, you pay the usual take rate (no discount). I am sorry. But if you are a customer and your take volume is more than 1 million and less than 2 million contracts, we will give you a nickel ($0.05) discount on all contracts over the first million. For all customer take volume over 2 million and under 3 million contracts, you will receive a dime ($0.10) discount on all volume between 2 million to 3 million contracts. On customer take volume contracts over 3 million, you receive a 15 cents ($0.15) discount on all contracts over 3 million.

For our Market Makers, we have established the “Market Maker Post Credit Tier” in all penny pilot issues excluding the 15 “Premium Tier” Issues. This is an additional posting credit on top of the credit Market Makers already receive. If you are a market maker and you post and trade under 1 million contracts, you do not receive an additional posting credit, but you do receive your “regular” $0.30 posting rebate. For Market Makers whose posting volume is between 1 million-2 million contracts, we will increase your posting credit by a nickel, so that for any posted volume over 1 million contracts, your rebate will be $0.35 For volume in the range of 2-3 million contracts, we will increase your posting credit by a dime, so that for any posted volume over 2 million contracts your rebate will be $0.40; and for volume over 3 million contracts, those contracts will receive an additional posting credit of 15 cents, equaling a rebate of $0.45.

Last issue to clear up is our treatment of “Strategy Trades.” Both manual broker dealer (BD) and firm facilitation strategy trades will be billed at $0.25 per contract up to a cap of $750 per day in the same option class. This is only for “Strategy Trades.” This is on both exchanges. If the trade does not qualify as a Strategy Trade, again is not a strategy trade, the manual BD rate on NYSE Arca is $0.25 with no cap. The firm manual rate is $0.18 and capped at $2,000 per option class per day.

On NYSE Amex, the BD manual rate is also $0.25 per contract with no cap and firm manual trades start at a rate of $0.25 for the first 174,999 contracts and decreases to $0.02 for contract volume of 800,000 or greater. The Firm Tiered pricing is explained here and the fee schedule is here.

If you have further questions, listen to the webcast, “New Fee Structure and Complex Order Book,” where Amy Farnstrom and I go over these exciting changes to our schedule of fees. We also answer questions on our Complex Order Book.

Trade ‘em Up!

TW

From Todd Wilemon:

Hey friends, just a quick note to clarify the new fee schedules that NYSE Euronext has implemented on both of our option exchanges.

This really is the case where the Big Print giveth and the Small Print… giveth even more!

Let’s get right to it. On NYSE Arca options we introduced some new tiers that reward and incentivize both our customers that take liquidity and also those market makers that post liquidity. This is known as a win-win situation.

The first new tier was the “Premium Tier.” For those 15 Penny Pilot Issues, we increased the posting credit by $0.05. It is an additional credit.
• Electronic Customers and Electronic Broker Dealers who were getting $0.25 to post liquidity now receive $0.30
• Market Makers who were receiving $0.30 now will receive $0.35
• To be clear, this applies to the 15 Premium Tier Issues. To get the list of Premium Tier names, you can go to this blog post or to the notice.

For all other penny pilot names, we created “Customer Take Discount Tier” and a “Market Maker Post Credit Tier.”

Let’s talk about the “Customer Take Discount Tier” first. This rewards and incentivizes our customers who take liquidity. If you reach certain volume levels we will give you a discount on taking liquidity. If you are a customer and your take volume is under 1 million contracts, you pay the usual take rate (no discount). I am sorry. But if you are a customer and your take volume is more than 1 million and less than 2 million contracts, we will give you a nickel ($0.05) discount on all contracts over the first million. For all customer take volume over 2 million and under 3 million contracts, you will receive a dime ($0.10) discount on all volume between 2 million to 3 million contracts. On customer take volume contracts over 3 million, you receive a 15 cents ($0.15) discount on all contracts over 3 million.

For our Market Makers, we have established the “Market Maker Post Credit Tier” in all penny pilot issues excluding the 15 “Premium Tier” Issues. This is an additional posting credit on top of the credit Market Makers already receive. If you are a market maker and you post and trade under 1 million contracts, you do not receive an additional posting credit, but you do receive your “regular” $0.30 posting rebate. For Market Makers whose posting volume is between 1 million-2 million contracts, we will increase your posting credit by a nickel, so that for any posted volume over 1 million contracts, your rebate will be $0.35 For volume in the range of 2-3 million contracts, we will increase your posting credit by a dime, so that for any posted volume over 2 million contracts your rebate will be $0.40; and for volume over 3 million contracts, those contracts will receive an additional posting credit of 15 cents, equaling a rebate of $0.45.

Last issue to clear up is our treatment of “Strategy Trades.” Both manual broker dealer (BD) and firm facilitation strategy trades will be billed at $0.25 per contract up to a cap of $750 per day in the same option class. This is only for “Strategy Trades.” This is on both exchanges. If the trade does not qualify as a Strategy Trade, again is not a strategy trade, the manual BD rate on NYSE Arca is $0.25 with no cap. The firm manual rate is $0.18 and capped at $2,000 per option class per day.

On NYSE Amex, the BD manual rate is also $0.25 per contract with no cap and firm manual trades start at a rate of $0.25 for the first 174,999 contracts and decreases to $0.02 for contract volume of 800,000 or greater. The Firm Tiered pricing is explained here and the fee schedule is here.

If you have further questions, listen to the webcast, “New Fee Structure and Complex Order Book,” where Amy Farnstrom and I go over these exciting changes to our schedule of fees. We also answer questions on our Complex Order Book.

Trade ‘em Up!

TW

From Todd Wilemon:

“We’re on fire!”

No, not literally, but the options business here at NYSE Euronext is going gangbusters. Can I use a few more clichés before I get to the meat of the story?

With two months left in 2009, it is amazing what has taken place. Under the leadership of the Ed Boyle, Senior Vice President of US Options, and with the support of the entire organization, we have been setting goals and ruthlessly executing our plan to become the places to trade options both electronically and via open outcry. In the US, there are only four physical option trading floors and we operate two of them.

What a year 2009 is turning out to be for us in the options world.

After buying the Amex, we gave ‘em a brand new home, new technology, the fastest trading engines in the business and put together an amazing support staff made up of the very best of the Amex staff and our awesome NYSE Arca folks. This was for an exchange that had not updated their technology since the ‘90s. Oh yes, it was that bad… avert your eyes and just keep walking. The good news is that NYSE Amex technology now has the same “look and feel” of NYSE Arca, with its very own pro rata, customer-centric market structure.

At the end of last year, volume on the Amex had declined to a 5.7 percent share of total option volume among the seven exchanges. In seven short months since we opened the new NYSE Amex Options exchange at 11 Wall Street, we have increased NYSE Amex market share by 54%. Yes, you read that correctly, we have increased our market share by more than 50%. This was a mighty team effort of exchange staff in New York, Chicago, San Francisco and all of our customers. The trading firms along with their their desk and back office staff, the brokers, traders, clerks and exchange floor staff have caused a resurrection in the Amex. And let’s not forget NYSE Arca, where we implemented several new order types and increased throughput and capacity, and nobody here even has three hands! To all involved, take the weekend off and celebrate…you deserve it. (But make sure you come back Monday because we are not finished!)

Technology has been a key driver of our success. When we resurrected the Amex, it was through technology. A brand-spanking-new floor with the latest technology for our floor brokerage community to interface in an electronic environment, with an audit trail to ensure compliance with our exchange rules that assure transparency and fair orderly markets. For electronic business we left 100% of the legacy Amex technology behind and ported over production to a new, tested and proven technical infrastructure.

The success of the “new” NYSE Amex is a major contributor but not the only driver of our growth in options. We have been busy on other fronts as well. We have expanded our suite of order types on both exchanges including the PNP order types. PNP or Post No Preference ensures that orders that you want to stay on our exchange do not route out to another exchange. You can check out each of the PNP order types as well as our other innovations by looking at some of my previous blogs or by visiting our order types page here (for NYSE Arca) and here (for NYSE Amex).

Here at NYSE Euronext, we want to empower the trader to have as much control and say in how his order interacts with the marketplace.

We have new Complex Matching functionality on both exchanges to handle multi-leg option orders. On NYSE Arca, we also support options with stock orders. With the new matching engines we unveiled the PNP+Complex order type, which is designed to give price improvement over the leg markets. Not only is this order type innovative, it is dynamic in that it always keeps your order at an aggressive price in the market. Check out my PNP+Complex posts and the Amex Complex post for more information! Also, stay tuned because in Q1 2010 (just around the corner) we have more exciting news regarding our complex order functionality and pricing.

On another front, the Penny Pilot program is expanding. The penny pilot program has been a huge boon to investors and traders alike. It decreases the spread between the bid and ask thus saving investors money when they trade options. It is nice to keep more of your money in your own pocket. The Penny Pilot program promotes tighter markets while increasing transparency of screen markets. No longer do investors have to hope for price improvement in some dark opaque process. Pennies allow market makers and traders post their true markets on the screen.

Did you see the list for the expansion of issues traded in pennies? If not or want to peruse it again, please go here.

And if that is not enough, we also made some of our stakeholders stockholders in NYSE Amex. We partnered with seven firms in the new NYSE Amex Options exchange. As Ed Boyle said, “Having important partners in like this allows us to feel that we are building the structure in the right direction.” It is no exaggeration to say that for NYSE Euronext the best is not enough, we are pushing on all fronts to continuously improve

One last thing — so you are the first to know (between you me and the fence post) 2010 promises to be just as exciting for NYSE Euronext Options participants. 2009 is just the beginning. Keep checking back for more, we have a lot to tell you about in the coming months!

I have expounded enough about NYSE Arca and NYSE Amex, the “wonder twins” of options trading, so what do you think of us? Seriously, have you traded on our exchanges? We want you trading here.

Trade ‘em up!

TW

P.S. In my next blog I’ll fill you in on our progress getting the Universal Trading Platform (UTP) into production. This is a fundamental piece of NYSE Euronext’s ability to “Power the Exchanging World,” and it is pretty amazing stuff.