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how would i use the peg ratio to find if the at&t stock is fully valued? |
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Will the economy have a W shaped recovery? |
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Why don't investors just invest in companies as soon as they become floated on the stock exchange? |
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Good discount broker to trade on Nasdaq? |
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Where can I follow the stock markets of all continents? |
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Where to invest $3000? |
Hello.
I have $3000 free money that I would like to invest.
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Sapphire Energy - Where do I find a stock price and symbol? |
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DBRN; Dress Barn - Buy, Sell or Hold? |
http://www.dressbarn.com
http://www.google.com/fi
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a_b_w | What is equity stock (not derivatives) tick size in American exchanges? |
- Are tick sizes same for the underlying stocks and stock options?
- Is it necessary for the tick sizes to be same in the underlying stocks and stock options? Pls explain the rationale for the same. |
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mrzwink
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the ticksize for stocks is $0.0001
for derivatives its $0.05 for option contracts with a premium over 50cent and $0.01 under 50cent.
to your other questions: no and no. |
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zman492
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<<<What is equity stock (not derivatives) tick size in American exchanges?>>>
The lowest tick size I have seen is $0.0001, but I am fairly sure for higher-priced stock the tick size increases to $0.01. (I could not confirm that with a quick google search.)
<<<Are tick sizes same for the underlying stocks and stock options?>>>
No. After decimalization the tick sizes for stock options were set at $0.05 for options under $3.00 and $0.10 for options $3.00 or more. That rule still applies to many options, although it is waived for a spread order.
Since then there have been some changes. First, in 2004 the Boston Options Exchange (BOX) introduced the price improvement period (PIP) which allowed penny ticks on any option for short periods of time.
Then, in 2007, the six options exchanges began a pilot program to trade options in one-cent increments for options on
A - Agilent Technologies, Inc.
AMD - Advanced Micro Devices, Inc.
CAT - Caterpillar, Inc.
FLEX - Flextronics International Ltd.
GE - General Electric Co.
INTC - Intel Corp.
JAVA - Sun Microsystems, Inc.
MSFT - Microsoft Corp.
QQQQ - Nasdaq-100® Trust Shares
SMH - Semiconductors HOLDRs
TXN - Texas Instruments, Inc.
WFMI - Whole Foods Market, Inc.
WM - iShares Russell 2000® Index
Under the pilot all QQQQ options had a penny tick. For other options covered in the pilot, options with a quoted price above $3.00 are available in nickel ($0.05) increments.
Since then options on over 100 additional stocks and ETFs have been added to the pilot program. For a detailed list, see
http://www.888options.com/help/faq/general.jsp#26
<<<Is it necessary for the tick sizes to be same in the underlying stocks and stock options?>>>
No.
<<<Pls explain the rationale for the same.>>>
To have a viable market, options must be liquid. To get liquidity, the exchanges must be able to recruit market makers. To recruit market makers, the exchanges must allow them to make significant profits for the risks they take. Larger tick sizes increase the amount market makers can make.
Stocks are more liquid and less risky than options. That makes recruiting market makers for stocks easier, so stock exchanges do not have to offer market makers the same kind of incentives option exchanges must provide. |
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