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Published on October 30, 2007

The Stock Exchange of Thailand (SET) 50 Index Options closed its first day with 304 contracts traded. Overall volume in both index options and futures was 5,973 contracts.

SET 50 Index Futures has traded since April 2006. Now, SET 50 Index Options offers call and put options with four different maturity periods.

Put options are contracts between a buyer and a writer, or seller. The put gives the buyer an option to sell a commodity or financial instrument to a writer of the option at a certain time at a certain price, called the strike price.

The writer has an obligation to purchase the asset at the strike price if the buyer exercises the option. The call option is similar to the put but is an option to buy an asset.

TFEX managing director Kesara Manchusree said about 100 contracts traded during the market's first hour yesterday. She described the performance as "satisfactory".

Most investors opened with long calls, or the purchase of call options. The overall stock market and main stock index are expected to rise from last week.

Kesara said trading volume in both index futures and options would reach 1 million contracts this year.

The cumulative volume of index futures traded so far this year is 920,000 contracts. Value is expected to be about Bt350 million a day, representing 15 per cent of the daily trading value of the main SET board.

Kesara said stock options would be the third derivative product offered and that it would debut next year.

Investors and brokerages have asked for the opportunity to trade stock options, so that they can diversify risk.

"Stock options are being looked at. If we see no problem, then they'll start trading next year," she said.

Siriporn Chanjindamanee

 The Nation