Cboe is launching small-sized S&P 500 options to pull in retail traders

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  • Cboe said Wednesday it is preparing to launch micro-options contracts for the S&P 500 index.
  • The Nanos S&P 500 contracts will be one-hundredth the size of S&P 500 index mini-options contracts.
  • Cboe said the Nanos contracts are aimed at helping retail investors build their trading confidence.

Retail traders are the focus of an upcoming options product from Cboe Global Markets, with the exchange operator set to launch micro-options contracts for the benchmark S&P 500 index.

“Nanos” will be one-hundredth the size of S&P 500 index mini-options contracts, which are already one-tenth of the S&P 500’s value. Nanos are designed to help retail traders “start small” as they build their confidence in trading, Cboe said in a statement Wednesday.

The Nanos S&P 500 contracts will be rolled out in the first quarter of 2022, trading under the ticker symbol “NANOS”. With the S&P 500 hovering around 4,580 on Wednesday, a Nanos contract would price at $US4.58 ($AU6).

“We believe Nanos are more appropriately sized for retail traders and enable traders to better express their opinions on market movements at a comparatively lower premium price,” Ed Tilly, chief executive of Cboe Global Markets, said in the statement.

The options contracts would allow day traders access to trading strategies such as hedging and asset allocation, the company said.

There’s been rapid growth in individuals taking up trading in stocks and other assets, particularly during the height of COVID-19 lockdowns. Retail traders made up 10% of stock trading volume on the Russell 3000, a broad benchmark of US stocks, according to a Morgan Stanley note published in June.

A survey from online broker Charles Schwab published in April indicated that roughly 15% of retail investors in the US began investing in 2020.