DJX Index Options (Dow Jones Industrial Average)

Dow Jones Industrial Average Index options (DJX) enable the trader to speculate on the future direction of the Dow. Since their introduction in 1997, DJX Index options have grown to become one of the most popular index options. A DJX Index options contract is based on the Dow Jones Industrial Average (DJIA) - the oldest continuous U.S. market index (established 1896).

To individual investors, the DJI is probably the world's best known stock index. Made up of 30 large and financially strong companies, the DJIA is the most widely followed index in the world - it is considered a key trading indicator, representative of the U.S. market's performance.

The DJX Index options contract is calculated as 1/100 of the current value of the DJIA. For instance, when the DJIA trades at $10,000, the DJX Index options contract will be priced at approximately $100. The DJX option strike prices are set in intervals of 100 points.

DJX Index options are popular for several reasons; they are:

• Tied to the DJIA - the world's oldest and best known stock index. Individual traders use the DJIA as one of the most widely used trading indicators of the market's overall performance;
  
• Allow investors to trade a cumulative basket of a 30-stock portfolio. This means investors can trade DJX Index options rather than having to analyze and invest in 30 individual stocks that make up the DJIA.
  
• Are a highly liquid trading vehicle.