Nasdaq Opens Options Trading to Gold and Oil Trusts
Published Date: 2/26/2025
Notice
Summary
Nasdaq ISE wants to let people trade options on Commodity-Based Trust Shares, which are special funds tied to physical goods like gold or oil. This change affects investors and traders by expanding what options they can buy or sell. The proposal was filed in early February 2025 and is now open for public comments before any money or trading rules change.
Analyzed Economic Effects
5 provisions identified: 4 benefits, 0 costs, 1 mixed.
Options Allowed on Commodity Trust ETFs
The Exchange proposes to amend Options 4, Section 3 to permit listing and trading of options on Commodity-Based Trust Shares ( Commodity-Based Trust Shares are ETFs structured as trusts that hold a specified commodity and/or cash). Any ETF approved on a primary market as a Commodity-Based Trust Share may qualify for options listing once the Exchange's initial listing criteria are met.
Exchange Listing Replaces OTC Trading Transparency
The Exchange states that listing options on Commodity-Based Trust Shares allows investors to transact in a listed market instead of the unregulated over-the-counter (OTC) market, increasing market transparency and enhancing price discovery for these options.
Position Limits for ETF Options Specified
Position and exercise limits for options on Commodity-Based Trust Shares would follow existing ETF-options tiers: the largest ETFs may have limits of 250,000 contracts on the same side of the market, while smaller ETFs may have limits of 200,000, 75,000, 50,000, or 25,000 contracts (with adjustments for splits, recapitalizations, etc.).
Faster Listing Without Extra Approval
The proposal would allow the Exchange to list and trade options on a Commodity-Based Trust Share without needing additional SEC approvals once the ETF meets the Exchange's initial listing criteria, enabling options to be offered soon after the ETF lists on its primary market.
Same Exchange Rules and Pricing Intervals
Options on Commodity-Based Trust Shares would trade under the Exchange's existing ETF options rules: strike intervals would be $1 or greater when strike price is $200 or less and $5 or greater when above $200; minimum increments would be $0.05 when option price is less than $3.00 and $0.10 when $3.00 or higher (with penny intervals or other strike programs applicable as provided in the rules). Weekly, quarterly, monthly, and LEAPS expirations (12 to 39 months) may be listed.
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