DJX is the symbol for options based on The Dow Jones Industrial AverageSM (DJIASM). The DJX index option contract is based on 1/100th (one-one-hundredth) of the current value of the Dow Jones Industrial Average. So, for example, when DJIA is at 11,000, the DJX level will be 110. The DJIA - the index on which the DJX contracts are based - is the oldest (established 1896) continuing U.S. market index, and the DJIA probably is the world's best known stock index to individual investors. Options on the Dow are available from 8:30 a.m. to 3:15 p.m. CT.
Since their introduction in 1997, DJX options have grown to become some of the most popular index options worldwide. This popularity leads to four fundamental reasons for using DJX options:
Investors are able to trade a broad market by making one DJX trading decision rather than making the many decisions involved with investing in numerous individual stocks.
DJX options offer a convenient and easy way to help reduce the market risk of a broad market portfolio, without disrupting the make-up of the portfolio.
DJX option purchasers risk only the premium they pay for the option, plus commissions. The risk is both known and limited.
Purchasing DJX options, instead of buying or selling numerous individual stocks, provides an investor with an additional opportunity to use investment capital elsewhere. For a relatively small percentage gain in the underlying index, a DJX option can increase in value by a multiple of that gain, assuming the correct option series was selected.
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Options Profit-and-Loss Diagrams
* In the Protective Put and Buy-write diagrams, the faint grey line represents an equity position, and the colored "hockey-stick-shaped" line represents the combined stock plus options position. For more details, please click on strategies
Options involve risk and are not suitable for all investors. Prior to buying or selling options, a person must receive a copy of Characteristics and Risks of Standardized Options (ODD). Copies of the ODD are available from your broker, by calling 1-888-OPTIONS, or from The Options Clearing Corporation, One North Wacker Drive, Suite 500, Chicago, Illinois 60606. The information in these materials is provided solely for general education and information purposes and therefore should not be considered complete, precise, or current. Many of the matters discussed are subject to detailed rules, regulations, and statutory provisions which should be referred to for additional detail and are subject to changes that may not be reflected in these materials. No statement within these materials should be construed as a recommendation to buy or sell a security or to provide investment advice. Any strategies discussed, including examples, do not include commissions, dividends, margin, taxes, and other transaction costs. However, these costs will affect the outcome of transactions and should be considered. S&P 100 and S&P 500 are registered trademarks of the McGraw-Hill Companies, Inc., and are licensed for use by the Chicago Board Options Exchange, Inc. (CBOE). The "Russell 2000 Index is a registered trademark of Frank Russell Company. The Nasdaq 100 is a registered mark of The Nasdaq Stock Market, Inc.
The Dow Jones Industrial AverageSM is a product of Dow Jones Indexes, a licensed trademark of CME Group Index Services LLC ("CME"), and has been licensed for use. "Dow Jones®", "Dow Jones Industrial AverageSM", "DJIASM" and "Dow Jones Indexes" are service marks of Dow Jones Trademark Holdings, LLC ("Dow Jones"), have been licensed to CME and have been sublicensed for use for certain purposes by Chicago Board Options Exchange, Incorporated ("CBOE"). CBOE's options based on the Dow Jones Industrial AverageSM are not sponsored, endorsed, sold or promoted by Dow Jones, CME or their respective affiliates and none of them makes any representation regarding the advisability of investing in such product(s). LEAPS, FLEX, FLexible EXchange, CBOE, Chicago Board Options Exchange and OEX are registered trademarks of CBOE, and Long-term Equity AnticiPation SecuritiesTM and SPXTM are trademarks of the CBOE.
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