OEX

Overview

The OEX, or Standard & Poor’s 100 stock index, is a subset of the broader S&P 500 Index. It includes 100 leading U.S. stocks with high market capitalization and ample liquidity. The index is commonly used by investors for options trading due to its representation of some of the largest and most influential companies listed on U.S. stock exchanges.

Examples

Apple Inc. (AAPL): Apple is one of the key constituents of the OEX, representing a substantial portion of the index due to its large market capitalization.
Microsoft Corporation (MSFT): Another major player in the OEX, Microsoft’s performance heavily influences the index value.
Alphabet Inc. (GOOGL): The parent company of Google also features prominently within the OEX, reflecting its significant economic footprint.

Frequently Asked Questions

Q1. What is the purpose of the OEX?

A1. The OEX is used primarily for options trading and provides a benchmark for the performance of 100 major U.S. stocks with considerable market capitalization and liquidity.

Q2. How does the OEX differ from the S&P 500?

A2. While the S&P 500 includes 500 companies, the OEX is a more concentrated index with only 100 of the most significant stocks from the S&P 500, chosen based on size and liquidity.

Q3. Where are OEX options traded?

A3. OEX options are traded on the Chicago Board Options Exchange (CBOE).

Q4. Can futures contracts be traded on the OEX?

A4. Yes, futures on the OEX are traded on the Chicago Mercantile Exchange (CME).

Q5. Why is the OEX important to investors?

A5. The OEX is important to investors because it represents highly capitalized and liquid stocks, making it useful for strategic options trading and hedging.

S&P 500 Index: A broader index that includes 500 large companies listed on stock exchanges in the United States.
Options Trading: A form of trading that involves contracts which give the right, but not the obligation, to buy or sell an asset at a specified price before a certain date.
Chicago Board Options Exchange (CBOE): A major option exchange in the United States where options contracts are traded.
Chicago Mercantile Exchange (CME): A global futures and options exchange where various financial derivative instruments are traded.
Liquidity: The ease with which an asset can be converted into cash in the market without affecting its price.

Online References

Suggested Books for Further Studies

“Options, Futures, and Other Derivatives” by John C. Hull: A comprehensive guide covering various aspects of derivatives, including options and futures.
“Trading Options For Dummies” by Joe Duarte: An accessible introduction to options trading that covers foundational concepts and strategies.
“Options as a Strategic Investment” by Lawrence G. McMillan: An advanced guide that explores different strategies for trading options, ideal for professional investors.

Fundamentals of OEX: Financial Basics Quiz

### What does OEX stand for? - [x] Standard & Poor's 100 stock index - [ ] Options Exchange - [ ] Official Exchange of Stocks - [ ] Occidental Exchange > **Explanation:** OEX is shorthand for the Standard & Poor's 100 stock index, comprising 100 leading U.S. stocks. ### On which exchange are OEX options primarily traded? - [ ] New York Stock Exchange (NYSE) - [ ] NASDAQ - [x] Chicago Board Options Exchange (CBOE) - [ ] American Stock Exchange (AMEX) > **Explanation:** OEX options are traded on the Chicago Board Options Exchange (CBOE). ### OEX futures contracts are traded on which platform? - [ ] Chicago Board Options Exchange (CBOE) - [ ] New York Stock Exchange (NYSE) - [x] Chicago Mercantile Exchange (CME) - [ ] NASDAQ > **Explanation:** OEX futures contracts are traded on the Chicago Mercantile Exchange (CME). ### OEX is a subset of which broader index? - [ ] NASDAQ-100 - [x] S&P 500 - [ ] Dow Jones Industrial Average - [ ] Russell 2000 > **Explanation:** The OEX is a subset of the S&P 500 index, consisting of 100 of the leading stocks from the S&P 500. ### What type of companies are included in the OEX? - [ ] Small-cap stocks - [ ] Mid-cap stocks - [x] Large-cap stocks - [ ] Penny stocks > **Explanation:** The OEX includes large-cap stocks, which are significant in terms of market capitalization and liquidity. ### Which of the following companies is likely included in the OEX? - [x] Apple Inc. (AAPL) - [ ] Small regional banks - [ ] Start-up technology company - [ ] Micro-cap pharmaceutical firm > **Explanation:** Apple Inc. (AAPL), being a large-cap company, is included in the OEX. ### How is the OEX useful for investors? - [ ] Immediate currency conversion - [x] Options trading and hedging - [ ] Real estate investments - [ ] Personal loans > **Explanation:** The OEX is primarily used for options trading and hedging due to the size and liquidity of its constituent stocks. ### What's significantly different between OEX and S&P 500? - [x] The number of companies included - [ ] The type of companies included - [ ] The exchange on which they are traded - [ ] Their market influence > **Explanation:** The OEX includes 100 large-cap stocks, whereas the S&P 500 includes 500 companies. ### When an investor trades OEX options, what do they engage in? - [ ] Real estate speculation - [x] Derivatives trading - [ ] Currency exchange - [ ] Retail investment > **Explanation:** Trading OEX options involves derivatives trading, as options are a type of financial derivative. ### Which aspect makes OEX an attractive benchmark? - [x] High market capitalization and liquidity - [ ] High risk and uncertainty - [ ] Smaller businesses and start-ups - [ ] Volatility and instability > **Explanation:** Its high market capitalization and liquidity make the OEX an attractive benchmark for traders and investors.

Thank you for exploring our comprehensive guide on the OEX and tackling our financial quiz questions. Continue honing your financial knowledge!