Options Trading Simulation – 4th edition
Surprise Strategy Unveiled Thursday, February 13, 2014

As part of the mandatory strategies to be executed during the Options Trading Simulation, the Montréal Exchange is pleased to unveil the surprise strategy.

Surprise Strategy: Each team will have to trade a credit spread using options on either the S&P/TSX 60 Index (SXO) or the iShares S&P/TSX 60 Index Fund (XIU) before the end of the contest.

Products

The SXO is an index option contract on the S&P/TSX 60. The S&P/TSX 60 index is a capitalization-weighted index of the 60 largest and most liquid stocks listed on the Toronto Stock Exchange.

The XIU is the iShares S&P/TSX 60 Index Fund. It is an exchange traded fund (ETF) that attempts to replicate the performance of the S&P/TSX 60 by investing in the same proportions as reflected in the Index itself.

Please note that important differences exist between the SXO and XIU options. You are therefore invited to conduct additional research in order to be familiar with the specifications of each contract.

Transactions

Each team must trade a credit spread using one of the two option classes mentioned above. Credit spreads are created by selling an option contract and buying another one with a strike price further out-of-the-money the credit spread used must be either a "Bear call spread" or a "Bull put spread"

Size

For each transaction on XIU or SXO, you must trade at least 14 contracts.

The team that does not execute correctly the surprise strategy will be deemed to have failed the mandatory component of the contest and, will consequently, be disqualified.

Live Chat

Meet us here on Friday, February 14, 2014 from noon to 1:00 p.m. (EST)! The Montréal Exchange will answer your questions on the surprise strategy through live chat.

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For questions on the Options Trading Simulation, write to contestadmin@m-x.ca.