Nanos. Fewer Strikes. Greater Confidence to Trade Options
Yes, Nanos offers fewer strike prices.
But why, and what’s that mean? And does this have anything to do with bowling or baseball?
Hey, those aren’t terrible questions.
We'll start at the top.
A strike price is the pre-set price at which you buy or sell, if you exercise the option you hold.
For stock options, you (the holder of the option) are buying or selling stock at the strike price.
But for index options, index value is converted into cash. Cold hard, sweet, sweet cash — that's what changes hands at settlement instead of shares.
Now, this is where things get real interesting.
So, let's say you're a chef. Of course, your job requires a bunch of kitchen equipment, but not every order requires every culinary tool in existence, right?
If someone orders a double chocolate soufflé, a professional chef might need a kitchen stocked full of equipment. Just like professional chefs, many institutional
investors prefer to have a full set of tools. That’s why we list so many strikes (12,000+ for SPX options) to choose from.
But Nanos are like a sandwich order. They only require a few pieces of equipment, so we’re giving you simple, basic tools – in this case, a toaster, a knife and a plate.
Because with Nanos, we’re listing fewer strikes to help keep new options investors from getting overwhelmed with too many options.
Okay, here’s all the nitty-gritty good stuff:
There are four terms — Monday, Wednesday, Friday and Monday, all right around 7 days or less ‘til expiration. And 5 strikes for each term.
So, to sum up all that stuff I just said:
Nanos are simple, especially compared to the amount of strike prices and contract sizes currently listed for standard options.
Short-term expirations allow you to get results lickety-split. And if you’re not down with 50’s lingo, that just means super quick.
Welcome to Nanos — a new, nimbler option for options traders.
Click here to check out additional articles about Nanos.
Options are not suitable for all investors. Before trading Nanos, you should discuss with your broker whether trading Nanos is right for you and review the Characteristics and Risks of Standardized Options (or Options Disclosure Document) regarding risks associated with trading options.
Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options (also referred to as the Options Disclosure Document or ODD). Copies of the ODD are available from your broker or from The Options Clearing Corporation, 125 S. Franklin Street, Suite 1200, Chicago, IL 60606 ([email protected]). The information in this document is provided for general education and information purposes only. No statement(s) within this document should be construed as a recommendation to buy or sell a security or to provide investment advice. Supporting documentation for any claims, comparisons, statistics, or other technical data in this document is available by contacting Cboe Global Markets at www.cboe.com/contact. Past performance is not predictive of future returns. Cboe®, Cboe Global Markets®, Cboe Volatility Index®, FLEX®, VIX®, and XSP® are registered trademarks and NanosSM, Nanos by CboeSM, Cboe NanosSM, Nanos OptionsSM, and Options InstituteSM are service marks of Cboe Exchange, Inc. or its affiliates. S&P 500® and SPX® are registered trademarks of Standard & Poor’s Financial Services, LLC and have been licensed for use by Cboe Exchange, Inc. All other trademarks and service marks are the property of their respective owners. © 2022 Cboe Exchange, Inc. All rights reserved.