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Regular Options Compared to Mini-Options
by Wendy Kirkland
Mini-Options are quite like their Standard Option cousins. The “only” difference is the number of shares that the option covers. The deliverable size should an option be exercised at expiration is 10 shares of the underlying equity as opposed to 100 shares for Standard Options. Mini-Options cover 1/10th of the number of shares.
This is a huge change!
Mini-Options became available to all traders in the Spring of 2013. The initial approval was for 5 equities: AAPL, GOOG, AMZN, GLD and SPY. The price of these equities is often out of reach of the everyday, retail trader.
These 5 equities were just the beginning… the starting place of Mini-Options. The SEC approval included the addition of other popular equities priced over $90 and that have had sold 45,000 contracts over the latest 3 calendar months. As retail investors and traders become familiar with the Big Trading Opportunities that Mini-Options bring, the number of available options covering other high-priced equities is likely to increase.
Let’s make a comparison, and then you’ll see what they really look like. You’ll better understand how they’ll work as you trade them.
What is the same?
Types of Options: LEAPS, Quarterlys, Monthlys and Weeklys
Expiration Dates: Friday of the Expiration Period
LEAPS: 3rd Friday in December of the Expiration Year
Quarterlys: Last day of the Expiration Quarter
Monthlys: Third Friday of the Expiration Month
Weeklys: The second Friday after Thursday’s creation/birth-date
Strike prices will duplicate those on of Standard Options.
Premiums: Comprised of Intrinsic (real money) and Extrinsic (time) Value.
The way they are listed on the option chain will be exactly the same.
Brokerage fees: Fees vary from broker to broker but the fee will be the same for either the Standard or Mini-Option contract.
If the fee for standard contracts is $12.95 for 1 to 10 contracts, then the fee for Mini-Options will be $12.95 for 1 to 10 contracts.
Bid/Ask Spreads: The spreads are exactly the same because the premiums are the
same for both Standard and Mini-Options.
What is the difference?
Symbols: There will be either a numerical additional to the equity symbol to differentiate the Mini-Options from the Standard Options -Possibility -Ex: AAPL10 or the word Mini-before or after the Strike price.
Number of Shares: Standard Options cover 100 shares of the underlying equity. Mini-Options cover 10 shares of the underlying equity.
There are more similarities than differences and the differences don’t affect the fundamentals of the option itself. What you have learned about Standard options will still apply to Mini-Options. The tools you have acquired: chart reading, candle patterns, indicators, equity fundamentals, and various strategies are all still applicable to Mini-Options in the same way they apply to Standard options.
Let’s See How They Compare
Using AAPL as an example:
Standard Options
Mini-Options
Number of Shares Covered by the Option
100 shares
10 shares
Strike Price
525
525
Bid/Ask Premium
5.50/5.95
5.50/5.95
Premium Multiplier
100
10
Total Contract Ask Premium
$595
$59.50
Total Value of Deliverable Covered by Option Contract
$52,500
$5,250
Total Value of Contract Bid
$550
$55
As you can see in the illustration above, Mini-Option contracts put the price range of these expensive equities within range of the everyday trader. The figures used were for a front month option; a weekly option can be a fraction of the monthly option premium.
PLEASE READ: Auto-trading, or any broker or advisor-directed type of trading, is not supported or endorsed by TradeWins. For additional information on auto-trading, you may visit the SEC’s website: All About Auto-Trading, TradeWins does not recommend or refer subscribers to broker-dealers. You should perform your own due diligence with respect to satisfactory broker-dealers and whether to open a brokerage account. You should always consult with your own professional advisers regarding equities and options on equities trading.
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