Cboe Fine-Tunes Options Pricing for Magnificent 10 Index
Published Date: 3/23/2026
Notice
Summary
Cboe Exchange is changing the smallest price step for options on its Magnificent 10 Index to make trading smoother and more precise. This change affects traders using these options and kicks in soon, helping them save money and trade smarter. The SEC gave this update a speedy thumbs-up, so watch for the new rules rolling out shortly!
Analyzed Economic Effects
5 provisions identified: 4 benefits, 0 costs, 1 mixed.
New penny and nickel option increments
The SEC approved a Cboe rule change that sets the minimum trading increment for Cboe Magnificent 10 Index (MGTN) options to $0.01 for series trading lower than $3.00 and $0.05 for series trading at $3.00 or higher. This approval was issued on March 18, 2026 and applies specifically to all series of MGTN options.
Expected tighter spreads and better hedging
The Exchange expects the finer $0.01/$0.05 increments to narrow bid-ask spreads, increase available price points, and improve precision for hedging, especially in short-dated MGTN option series where almost all trading occurs. The filing states these effects should boost liquidity and execution opportunities for investors trading these options.
Penny increment tied to XND/QQQ status
The $0.01 minimum increment for MGTN options applies only so long as Nasdaq 100 Micro Index (XND) options have a $0.01 minimum increment. If XND options stop having a $0.01 minimum increment (for example because QQQ options no longer participate in the Penny Interval Program), then MGTN series trading below $3.00 would instead have a $0.05 minimum increment at the same time.
Some MGTN executions already allow pennies
Under current rules, MGTN options may already execute in penny increments in specific situations: complex order executions and automated improvement mechanism (AIM) auctions permit penny executions. This means some trades can already occur at $0.01 increments even before the broad increment change.
Possible Penny Interval Program qualification in 2026
The Exchange notes that average daily volume in MGTN options grew about 30% from December to January and states that if this trend continued during 2026, MGTN options would qualify (if eligible) for the Penny Interval Program at the December 2026 rebalancing. Qualification would affect whether penny increments are available under that program.
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