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How does a KOSPI 200 Option Trade?
by Barbara Cohen
CIO, Pure Reason, LLC.
KOSPI 200 options are based upon the KOSPI 200 futures contract, the underlying index of the top 200 stocks traded on the Korea Stock Exchange (KRX). KOSPI futures and options trade in contracts much like the contracts traded at the Chicago Mercantile Exchange (CME).
KOSPI 200 Options Details:
| Underlying Index: | KOSPI 200 x 500,000 Kwon |
| Trades In: | Contracts |
| Contract Months: | March, June, September, and December |
| Trading Hours: | Continuous Auction, 08:00 - 3:05 EST (Sunday - Thursday) |
| Price Change Limit: | 10% of the previous day's closing price |
| Price Quotes: | 0.01 point (KRW 1,000) = .01 Index points |
| Tick: Value of Minimum Tick | .05 Index Points 25,000 Korean Won |
| Last Trading Day: | Second Thursday of the delivery month |
| Last Settlement Day: | The following day of the last trading day of the month |
| Settlement Method: | Cash |
In 2007, how does the KOSPI 200 Options compare to other Exchanges in the world?
Based on the Futures Industry Association's January/February 2007 article: Trading Volume: Strong Start to 2007 in Most Markets:
| Contract | Jan-Feb 2007 | Jan-Feb 2006 | % Chng |
|---|---|---|---|
| Kospi 200 Index Options, KRX | 441,382,902 | 502,403,128 | -12.1% |
| Eurodollar Futures, CME | 89,570,029 | 69,820,347 | 28.3% |
| Euro-Bund Futures, Eurex | 54,040,744 | 50,270,433 | 7.5% |
| 10-Year T-Note Futures, CBOT | 51,859,678 | 38,451,287 | 34.9% |
| E-mini S&P 500 Index Futures, CME | 44,139,389 | 34,810,926 | 26.8% |
| Eurodollar Options, CME | 43,568,723 | 38,770,987 | 12.4% |
| DJ Euro Stoxx 50 Index Futures, Eurex | 35,267,044 | 24,346,472 | 44.9% |
| 1-Day Inter-Bank Deposit Futures, BM&F | 34,468,686 | 25,104,797 | 37.3% |
| DJ Euro Stoxx 50 Index Options, Eurex | 33,958,518 | 21,289,059 | 59.5% |
| Euribor Futures, Euronext.liffe | 33,862,549 | 30,103,093 | 12.5% |
| Euro-Schatz Futures, Eurex | 28,151,455 | 27,318,454 | 3.1% |
| Euro-Bobl Futures, Eurex | 26,165,828 | 26,427,952 | -1.0% |
| 5-Year T-Note Futures, CBOT | 23,618,805 | 21,530,080 | 9.7% |
| TIIE 28-Day Interbank Rate Futures, Mexder | 21,774,100 | 21,853,421 | -0.4% |
| Crude Oil Futures, Nymex | 19,459,274 | 11,075,693 | 75.7% |
| 3-Month Sterling Futures, Euronext.liffe | 19,347,323 | 11,769,000 | 64.4% |
| S&P 500 Index Options, CBOE | 19,336,866 | 13,820,017 | 39.9% |
| 30-Year T-Bond Futures, CBOT | 17,169,027 | 15,556,469 | 10.4% |
| TA-25 Index Options, TASE | 14,120,036 | 14,027,202 | 0.7% |
| E-mini Nasdaq 100, CME | 13,806,945 | 12,430,381 | 11.1% |
Even though the KOSPI began 2007 down 12% in volume, it was still nearly 5 times larger in trading than the nearest trading instrument, the Eurodollar Futures on the CME.
How does the KOSPI Trade?
The KOSPI often follows the activity of the New York Stock Exchange.
On August 3, 2007 KOSPI rebounds on Wall Street rally.
On August 6, 2007 KOSPI ends sharply lower due to Wall Street Losses
On August 8, 2007, the US Stock Market was up over 200 points. The KOSPI rose 23.73 points.
On August 10, 2007, KOSPI shares crash on US. Subprime Woes, with the Index diving over 4%.
In essence, the US DOW is a leading indicator for the KOSPI.
Does the KOSPI chart look like a chart we are familiar with?
The KOSPI trades just like our stocks and contracts and looks much the same on a chart.
Click on the picture to magnify
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