Nanos: The Power of a One Multiplier

When it comes to options, do you know what the “multiplier” does?

In index options, the index multiplier represents the number of underlying units each contract controls.

Traditional index options use a 100-contract multiplier, meaning one contract corresponds to 100 units of the underlying index.

You may be wondering why the multiplier matters. Because most index options have a 100-contract multiplier, traders must calculate the actual cash value of each position to understand their total exposure.

(Quantity of contracts × trade price × index multiplier = total premium)

Experienced options traders are familiar with the standard 100-multiplier. Newer traders, however, may not realize that a quoted option price of $3.20 actually represents a total cost of $320, the result of multiplying by 100.

A one-multiplier option is truly distinctive. Until now, U.S. listed index options have always used larger multipliers. Nanos options are the first to feature a one-multiplier structure, meaning the displayed price - for example, $3.20 for an at-the-money Nanos option - is the actual price paid or received (plus applicable fees and commissions).

This accessible price point allows investors with limited capital or those new to options trading to participate without committing large sums.

While a single Nanos options contract carries lower total downside risk, it also offers proportionally lower profit potential compared to a traditional 100-multiplier option.

For example, if you purchase a Nanos call option for $3.20 with a strike price of $430, and the index closes at $440 at expiration, your profit would be $6.80 (less applicable fees and commissions). This is calculated as the difference between the index price and strike price ($10) minus the contract cost ($3.20).

($440 − $430) − $3.20 = $6.80

With a 100-multiplier option, potential gains are greater but so is the capital required. Using the same example illustrates the difference clearly.

Suppose you purchase a 100-multiplier call option for $3.20 with a $430 strike price. Because of the 100-multiplier, the total contract cost becomes $320 ($3.20 × 100).

If the index price is $440 at expiration, the resulting profit would be $680 (less applicable fees and commissions).

($44,000 − $43,000) − $320 = $680

This represents the difference between the index value at expiration ($440 × 100 = $44,000) and the strike value ($430 × 100 = $43,000), minus the contract cost ($3.20 × 100 = $320).

Can you increase potential returns by trading more than one Nanos contract? Yes. As you gain experience managing risk, you can consider gradually increasing your position size.

Using the same scenario, five Nanos contracts would generate $34 in profit ($6.80 × 5 contracts), less applicable fees and commissions. However, larger positions also carry greater risk, making Nanos an effective way to begin trading at a manageable scale.

In short, Nanos delivers many of the same benefits as standard-sized index options but in a smaller, more affordable format, making options trading more accessible to everyday investors.

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