NASDAQ-100 Index Options
The NASDAQ-100 Index was launched in January 1985
and comprises the largest non-financial companies listed on the NASDAQ
stock market. Most of the 100 issues are well known companies, such as
Microsoft, Qualcomm, Intel, and Cisco Systems.
NASDAQ-100 Index Options were first traded on the
Chicago Board Options Exchange (CBOE) in February 1994.
Since the stocks represented in the NASDAQ-100 Index can
be very volatile, the prices of NASDAQ-100 Index options can also vary
There are several ways you can
invest in the NASDAQ-100 index:
- By purchasing contracts of NASDAQ-100 Index
Options (NDX). Since each options contract controls 100 shares, you
could leverage $150,000 of equity (assuming a NASDAQ-100 Index price of
$1,500) with a single NDX contract;
- By buying mini-NDX index options (MNX). The
price of a MNX option is calculated as 1/10
of the value of the NASDAQ-100 Index. Assuming a mini-NDX
contract costs $1,500, you could control $15,000 of equity (a multiplier
of 100) with a single MNX contract;
- You can trade the NASDAQ-100 Tracking Stock (QQQQ).
The value of one QQQQ share generally approximates
1/40 of the current value of the NASDAQ-100
index. For example, if the current price of the NDX is $1,500, the
QQQQ price would be approximately $37.50 per share;
- You can invest in options on the NASDAQ-100 Index
Tracking Stock (QQQQ options). If a QQQQ trades at $37 per share, one
option contract would control $3,700 of equity (a multiplier of 100).
QQQQ Options are the most liquid
option currently traded on the market. We recommend them as a
relatively low risk way of leveraging a part of your trading capital.
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