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Strategies & Market Trends : Systems, Strategies and Resources for Trading Futures

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To: Jerry Olson who wrote (31450)	8/24/1999 4:51:00 PM
From: peter n matzke	of 44573

FOR IMMEDIATE RELEASE Margin Rules Changed at CBOE Effective Immediately CHICAGO, August 24, 1999 - The Chicago Board Options Exchange (CBOE) with approval from the Securities and Exchange Commission (SEC) announced extensive margin rule changes which went into effect on Monday, August 23, 1999. The changes represent another step in CBOE's efforts to improve margin rules to more accurately reflect market risk and are based on recommendations of an industry committee. The Committee was comprised of representatives from options self-regulatory organizations and from a number of member firms. Their recommendations represent an industry consensus. The changes represent one phase of changes and contain a number of strategy-based enhancements and new capabilities for margin and cash accounts. Another phase of change, expected to begin in the second quarter of 2000, is a portfolio risk-based margin and cross margin approach which will be an alternative to strategy-based margin requirements for broad based index products. The changes that go into effect immediately were approved by the SEC on July 27, 1999. Some of the changes include: * Loan Value for Long-Term Listed Options. Member firms may now lend up to 25% of the current market value of a listed option that has more than 9 months until expiration. The initial and maintenance margin is thus 75%. * Reduced Maintenance Margin Requirements for Stock Positions Hedged With Options. These include protective puts, conversions, reversals and collars. * Provisions Allowing European Style Index Spreads in Cash Accounts. * Recognition of Long and Short Butterfly Spreads. Long butterfly spreads will pay in full the net debit incurred (i.e. the maximum risk). Short (credit) butterfly spreads will pay the difference between the exercise prices. Net credit received may be applied. * Recognition of Long and Short Box Spreads. The net debit incurred by establishing a long box spread (i.e. the maximum risk) must be paid in full. Short boxes pay the difference in the exercise prices (aggregate). Net credit received may be applied. * Loan Value for Long Box Spreads in European Style Options. Member firms may lend up to 50% of the difference in the aggregate exercise prices on a long box spread if it is comprised of European style options. CBOE, the world's largest options marketplace and the creator of listed options, is regulated by the Securities and Exchange Commission (SEC). For additional information about the CBOE and its products, access the CBOE site on the World Wide Web at cboe.com. For an archive of CBOE Press Releases, visit the following web address: cboe.com.

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