What is a Mini-Option? How Does Mini-Options Change the Way You Trade?

March 15, 2013 -

What are Mini-Options?



Beginning March 18th, the International Stock Exchange will provide the option for investors to purchase Mini Options. Basically instead of a multiplier of 100 with normal stock option, the underlying multiplier is 10 shares. 

This change was a result of increased stock prices and volume on popular stocks over the past few years. The new mini options basically make it possible to hold the option to either buy or sell fewer than 100 shares. 

How do you distinguish between the Mini-Option and a regular option?


There will be a number that will be added to the standard option symbol to distinguish between the mini option contract and the former. 

Which stocks will have the mini option available?


TD Ameritrade announced that they would be making Mini Options available to its customers for the following five stocks: SPY, AAPL, GLD, GOOG, and AMZN. My assumption is that other brokerages will follow suit or have done so already. They will only be made available for stocks that have traded at least 10,000 contracts in the previous 3 calendar months and the price of the underlying security is at least $150.

How do Mini-Options affect your trading plan?


For the casual trader, this just means that you will be able to buy more mini-options than your regular options. Instead of one Apple option, you may be able to purchase 10 mini-options. The way the mini options works is similar to that of your existing option contacts. Its price movement is still based on the stock itself, the contract features, and everything else is similar. The main difference lies in the number of shares each contract represents. 
 
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