FLEX® Options
FLexible EXchange® Options, or FLEX® Options, were introduced by CBOE in 1993. They were designed to give institutional investors greater access to customized derivatives. FLEX® options provide customization features similar to over-the-counter (OTC) options but with the convenience and guarantee of exchange-traded options.
Similar to OTC options, FLEX® options allow contractual terms such as expiration date, exercise price, style and contract size to be individually specified.
Unlike OTC options, FLEX® options are traded through the exchange, with the Options Clearing Corporation (OCC) being the issuer and guarantor of all FLEX® option contracts. As the OCC is the largest derivatives clearing organization in the world as well as the first to be awarded a "AAA" credit rating from Standard & Poor, the trading of FLEX® options is considered to be virtually free of counterparty risk.
Index FLEX® Options
The first types of FLEX® options to be introduced were FLEX® option contracts on stock market indices and hence they are often simply referred to as FLEX® options. Index FLEX® options are available on all CBOE listed indices, including the following major indices:
- Dow Jones Industrial Averages
- S&P 500®
- S&P 100®
- Nasdaq 100®
- Russell 2000®
Equity FLEX® Options
Following the success of Index FLEX options, CBOE launched FLEX® options on individual equities in 1995 and they were known as E-FLEX® options. E-FLEX® options are available on a wide range of actively traded underlying stocks and they include most option classes that are listed at CBOE.
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