AEX index dividend futures to arrive
45 comments / April 18, 2010
In a fortnight a new product will see the light of day on the Amsterdam derivative markets. The AEX dividend futures will start trading on May 3rd. This opens possibilities for getting exposure to yearly annual dividends in the AEX index, or to hedge your long term dividend risks. If the futures will turn out to be a success, that is. The future market isn’t always the brightest spot on the financial market in Amsterdam, but on the other hand the long term options are fairly liquid compared to the neighbours. It’s a challenge to write about this subject avoiding specialist jargon and slang. Curious readers with a regular job in the normal world will eventually lose track in this post, sorry.
index dividend futures
Euronext is introducing the AEX Dividend Index, accumulating the dividends of each constituent of the AEX index over a certain year. This index starts at zero after the December expiration, and will be reset one year later. This way the separate yearly dividends will be open for trading, so the dec’13 dividend future will only represent the dividends declared in 2013. The contract size is 200 euro per future point – just like normal futures on the AEX. Initial lifetimes of five years.
Regular investors in the CAC40 dividend futures were told a few months ago that the dividends are an asset class in their own right, having low correlation with other asset classes. That’s a difficult one. I seriously doubt the low correlation. The reason for any regular investor to buy or sell indexdividends isn’t very obvious.
Dividend futures elsewhere in Europe
The Amsterdam derivative exchange has a history of being the first with financial innovations in Europe. The first option exchange, the first long term options and the first liquid market in daily and weekly options. With the index dividend futures it has been playing catch up, as the Frankfurt and London have dividend futures for quite some time now. It has been a big success for the Eurostoxx, and even the tiny Swiss Market Index has seen some daily turnover in those dividend futures. The dividend futures on the FTSE 100 have been a tremendous success as well since their inception in May 2009.
Even the DAX index has seen the introduction of dividend futures, failing miserably as the DAX index doesn’t take dividends into account. And there isn’t much option position to hedge with a total return index..
Risk and opportunity for option market
It remains to be seen whether or not the AEX dividend futures will gain some liquidity. It definitely has the potential to change the market in the long term index options. Speculating on dividend changes with synthetics and jelly rolls in the options market is looking a little clumsy compared to straightforward dividend futures. Difficult to predict whether these dividend futures will increase turnover in long term options (better possibilities to hedge positions), or maybe even reduce the volume in the long term series.
Vacancies for the primary market makers in the AEX dividend futures are open. Allowed spread for each of the five yearly maturities is just 1 index point with a minimum quotesize of 100 lots. That is the same as quoting AEX long term jelly rolls with the size of 200 options and one euro spread. The current prof market for long term dividends isn’t quoted at such tight spreads – but interest risk is responsible for that as well.
Maybe IMC can finally start making some money now they can hedge their dividend risk?
wouldn't VDM have wanted this product bad… ?
dont think it was long dividends that sunk them
@4:15 correct. Positions were limited, no problems there..
overhead was not, unfortunately
All options losing a lot on dividends lately. This should help them… or not.
Why do you always have to mention VDM? Stop this please! It has got nothing to do with dividend futures.
Best thing to do is to sell dividend. In this case you receive money.
10:22 hahahahah
wat if they start giving out dividends rite now.. which co's might with the recovery
you do receive money but you pay Taxes on them. ask optiver
More dividend means more money when you sell the future
you meant less
more interest = more money
more dividend futureprice is higher and just sell is en you get more money
bad troll, no cookie
I've been following this blog since few weeks… and don't understand one thing. Why do you always use anonymous, instead of writing at least, nicknames or something… It's difficult to read your comments because of that.
Its a tradition here to post anonymously.
Its not that we don't want our bosses to find out what we really think about them.
All posts are by one person
Yes, a person who calls himself 'Anonymus', with multiple personalities. Somehow no-one else seemed to be interested in posting comments.
Actually this is just 4chan without the images.
Ariel Zwolinski, you're ass is fired….
what's wrong with this fellow?
http://www.linkedin.com/in/zwolinski
I don't think this is the right time to bring new products on the market, when the volume is as low is now… That`s why this wont be a succes within the next 3 years.
agree with 5.22, barely any interest in the listed options themselves so why is anyone gonna care about div futures !
nothing's wrong with me, just have been wondering why don't you at least use nickname's, so it would be easier to distinguish who's referring to whom… not to get to know your identities. never mind.
you've made fun of me… I'll get over it.
Still, why are you so pessimistic about aex dividend futures? even if there is not going to be a lot of interest, isn't it better to have a wider choice of instruments?
i just came on to this website by chance and saw all thes bored option market makers, who, wont be getting a bonus this year (again), and talking shit all day on this blog – losers
aha, so smart-money has found this website?!
continue surfing, and leave us alone – dick-head.
vix at 17 – nice
happy trading
I totally agree with the Zwolman…we should use nicknames and not comment anonymously !
im just sad that he is from my country…
gosh, if I'd known you're going to be so mad because of a simple proposal, I wouldn't have stated it… could you get over it?
Nobody seemed to care to answer a simple question: isn't it better to have more products? I am certain that costs of introducing a new futures contract is pretty low, so I cannot see a point why you "don't think it is the right time to bring new products on the market", as 5:22 has said. Even if the volume's going to be low for a decade…
nobody cares… new topic please!
Ariel wast door en door schoon!
(niet duur)
@1:40
I thought you're going to say that. At least you did not mock me…
weer of geen weer het is altijd Centerparcs weer
?
you are all so thick it is a complete disgrace
no wonder none of these guys are making any money
Hiep Hiep Hoi, ……..
What is this world coming to when I see somebody crossing 50 straddles in the profmarket in AKZO… stay home idiots!!!
Or 50 symmetrical strangles?
It's not that stupid, in fact you lock some money if you can make strangle with good price.
cool!
I trade these,happy to assist if anyone need any information mtaub@vcmllp.com
man u are a broker .. kindly don't allude ur middleman broking to trading pls ..
my appologies – was just offering to assist with any added INFORMATION regarding the div swaps.
@ 4:35 aka mtaub,
You must be a busy boy. There hasn't been any future traded yet.
yes product not activly traded yet!! expecting some vols be going through before June expiry. ATM focusing on Div fut within SX5E and SMI with the new launch (25/05) of listed Div options on Sx5E