Interview with Philipp Schultze, Sales Equity & Index Derivatives at Eurex

What is the rational behind the introduction of  SMI^® Weekly Options?
In the last years we observed an increased interest from market participants to trade Weekly Options accompanied with increased volumes in EURO STOXX 50® and DAX® Options with weekly expirations. Furthermore, we saw increased volumes in our standard SMI® Futures and Options in the first half of 2016. These market developments and requests by our members led to the decision to launch SMI® Weekly Options.

What is the main benefit of the new SMI® offering?
SMI® Weekly Options offer another opportunity to gain exposure and trade the most popular benchmark index in Switzerland. With the launch of options on SMI® with weekly expirations, Eurex rounds out the existing SMI® offering which includes futures and regular options as well as products on SMI® such as flexible options contracts available via Eurex Trade Entry Services.

What do you think is the key element of making Weekly Options such a popular instrument?
These products are very popular in the U.S. and as our trading figures show they enjoy increasing popularity as well at Eurex. Investors can implement tailor-made strategies on their individual needs. Eurex currently offers Weekly Options on EURO STOXX 50® Index, DAX®, Euro-Bund Futures and more than 50 European single equity underlyings.

Can you give examples of trading strategies which would involve Weekly Options?
Weekly Options can be used for various trading strategies and combinations. Options with a short time to maturity react more to price movements of the underlying compared with options with longer maturity. In option terms it means that the gamma exposure of a short dated option is much higher than that of a longer dated option. On the other hand, the decay in time value of options is accelerating towards the end of the lifetime of the option. Based on these factors Weekly Options are either interesting for outright event driven strategies in order to benefit from movements of the underlying or investors can implement “short premium” strategies by benefitting from the decay in time value of the option. Furthermore, Weekly Options can be implemented in option strategies (e.g. diagonal spreads) by pairing Weekly and regular options.

Who will be the main users of SMI® Weekly Options?
Weekly Options on SMI® will be an instrument for all market participants interested in gaining exposure towards the Swiss market. Weekly Options are used by professional traders for hedging purposes or by portfolio managers with equity exposure to the Swiss market.

Are liquidity providers committed to this product?
With Susquehanna we have the commitment of a very professional and experienced Market Maker. Discussions with further Market Makers are ongoing. The Market-Making scheme is open towards all members.

CV Philipp Schultze

Philipp Schultze is working as Sales Equity&Index Derivatives at Eurex. Additionally he owns the product responsibility within Sales for the SMI® and listed ETF Derivatives offering traded at Eurex. Previously he was working for more than 15 years within the financial industry in equity derivatives trading and sales. He holds a bachelor of applied science from the ZHAW School of Management and Law in Zurich and the diploma as a Certified International Investment Analyst (CIIA).