Equity Index Derivatives
Equity index derivatives are traded on the TASE on the following indices: TA-35, TA-125, TA Banks-5.
TA-35 index options are a success, not only locally but on an international scale as well.
In 2013, TASE launched weekly options on the TA-25 Index (currently: TA-35 Index)
Weekly options are identical to monthly options except for their life span – two weeks. Trading in the new “weeklies” has been active right from the start, thousands of options change hands daily. The trading volume of weekly options doubled within the first year and in 2016, they accounted for approximately 20% of the total volume of TA-25 Index (currently: TA-35 Index) options.
Weekly options enables trading on additional expiration dates and as a result, it is possible to get a better view of market expectations of volatility over time.
On March 29, 2015 TASE launched options and futures on the TA-100 index (currently: TA-125 Index). The terms of the TA-125 Index derivatives
are identical to those of monthly derivatives on the TA-35 index.
In addition, as of March 29, 2018, long-dated futures will be traded on the TA-35 index for a period of 15 months.
New series of future contracts will be opened in March, June, September and December for 15 months. In the other months, as is the current practice, derivatives for 3 months will be opened. Consequently, at any point in time, there will be 7 monthly series being traded – 3 series for each of the three coming months and another 4 series for 6, 9, 12 and 15 months. This will be in addition to the weekly options that will continue to be opened, as is the current practice.
TASE has identified several parties that might trade in long dated futures. Firstly, activity that currently takes place on the OTC market might shift to TASE. Next, there is a likelihood of “regulatory hedging” in respect to the insurance companies’ nostro portfolios, as part of the implementation of the Solvency II Regulations. Moreover, the launch of the new futures might encourage the entry of new players who prefer to trade in “longer” derivatives than those currently in existence.
The TA-125 index is considered to be the best benchmark of the Israeli economy by local and foreign investors alike.TA-125 index derivatives help diversifying hedging opportunities available to investors, including Institutional investors and ETP managers.