CME Launches FX Options Converter Tool
CME Group, a major US-based derivatives market operator, has announced the launch of a new FX Options Volatility Converter tool. It will allow market participants to price the exchange-listed FX options liquidity in over-the-counter (OTC) terms.
The new tool extracts the extensive market price data from the exchange’s central limit order book. That’s already functionally equivalent to OTC options and then creates a volatility grid by tenor and deltas for comparison purposes.
Their new FX Options Vol Converter calculates and converts their listed FX options premiums, fixed strike data, and rules. It also formats into an OTC-equivalent volatility surface, in OTC standard tenors, deltas, and quote conventions.
Thus, it creates comparable pricing across major options pairs. This was an explanation from Paul Houston, managing director and global head of FX products at CME Group.
CME: Aiming to Ease the Traders’ Decision-Making Process
The market operator came up with this tool when market participants were looking for efficient ways to lower trade costs.
According to CME, this will allow the forex traders to efficiently monitor price relationships. This helps them to make informed market decisions and execute the best trading strategies.
Houston also said, traders can quickly act upon a market opportunity with a drill-down showing the product code. Moreover, showing the reference premium price, volatility, delta, and futures value to help identify their trading opportunity.
Recent news reported on a year-on-year decline in forex volumes on CME for the month of August. However, metals trading on the exchange broke records.
Furthermore, it also reopened its Eurodollar options trading pit last month. However, that trading pit underwent closure earlier due to the COVID-19 pandemic.
Meanwhile, CME Group Inc. (CME) will begin trading ex-dividend on September 09, 2020.
On September 25, 2020, a cash dividend payment of $0.85 per share is scheduled to be paid. Shareholders who purchased prior to the ex-dividend date are eligible for the cash dividend payment.
This is the 3rd quarter that CME has paid the same dividend. The dividend yield is 2% at the current stock price of $169.62.
