April 20, 2011
In this trader's opinion, the contracts on the CBOE and its sister exchange, C2, should be fungible, otherwise SPX contracts will continue to have huge customer-unfriendly spreads.
If CBOE really believes that AM expiration is anachronistic, they should immediately file for changing the pit-traded SPX contract to PM expiration. That way both the CBOE and C2 contracts would have the same terms and thus be ***fungible.***
So either both should be AM or both should be PM.
C2 notes that in 1987-1992 the SPX (AM) and NSX (PM) contracts co-existed, but does not explain why the NSX was abandoned, nor do they make mention of the heavily traded AM-PM roll (SPX-NSX roll) on expiration Fridays.
Also C2 should explain why the proposed contract cannot be part of the penny pilot, and instead is asking for a minimum tick size of 5 cents for contracts trading below $3 premiums, and 10 cents otherwise.
Regarding the PM expiring OEX contract, it should be noted that the contract has pretty much died since its early hay days, despite or because of its American exercise feature. C2 rightfully notes that the OEX has no futures, nor futures-options, traded on it. In fact traders use the SPX futures to hedge their OEX positions, if any.