Personal Finance & Money Asked on December 13, 2020
Some options can be expensive because they have 100 shares as underlying. Given that fractional shares exist, why are there no fractional options to help reduce the cost?
Is it because of illiquidity and low demand? If not mistaken, a few years ago, there used to be mini options that had 10 shares as underlying instead of 100 shares.
...because of illiquidity and low demand[.]
Answered by Grade 'Eh' Bacon on December 13, 2020
6 or 7 years ago they tried mini options on AMZN, AAPL, GOOG, GLD and SPY.
Other than SPY, they weren't a big hit, trading a fraction of the volume of standard options, probably because the low liquidity resulted in wider B/A spreads as well as the adverse effect oh higher commissions for an equivalent amount of contracts.
There are XSP mini options. Other than IWM and SPY, I don't trade index related options so I don't know if other mini options exist besides XSP.
Answered by Bob Baerker on December 13, 2020
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