Copenhagen based Retail FX and CFDs broker Saxo Bank has announced that it will begin to offer CFD Options on a range of option roots, covering puts and calls on 15 of the world’s largest stock indices.
CFD Options are OTC instruments based on Exchange Traded Index Options. They can help diversify a portfolio, as not only do they enable clients to take a position, they can be used for portfolio hedging purposes too.
Magnus Sundby
Commenting on the launch, Magnus Sundby, Product Manager – CFD & Equities, said:
This new product range will lower the entry barrier for clients looking to trade options, as CFD options reduce the cost of trading for clients by giving them access to cost-effective investment and hedging strategies as well as tools to help them manage the risk.
Compared to traditional Listed Options, the CFD Options will also provide clients with greater flexibility in terms of contract size, since the lot is equal to one Index. By lowering the size of the contract, we allow more clients to trade Index Options, and enable them to manage their risk more efficiently – yet another example of how we continue to democratise trading and investing.
CFD options are attractive for traders and investors as there is no spread mark-up and commission required when buying CFD options – clients simply pay a premium up front. And as one lot equals one index, they provide great flexibility in terms of contract size.
All new CFD Options are European style options that are cash settled at the official settlement price and clients can use the new instrument type to place directional bets by buying Puts or Calls.
The new product will be available on SaxoTraderGO and SaxoTraderPRO for clients under Saxo Bank A/S as well as those in the United Kingdom, Singapore, and Australia.