Bangkok--5 Oct--SET Thailand Futures Exchange PCL (TFEX) announced that SET50 Options will commence trading on October 29, 2007, bringing increased choice and variety to investors. As envisioned in The Stock Exchange of Thailand’s three-year strategic plan, this new TFEX product will further enhance the attractiveness of the Thai market. “Derivatives are efficient and popular investment instruments, as evidenced by the high demand for our first product, SET50 Futures. Its trading turnover has steadily increased as investors appreciated its usefulness as a risk management tool. We anticipate that SET50 Options will stimulate a similar response,” TFEX’s Managing Director Ms. Kesara Manchusree said. A SET50 Options contract gives the holder the right, but not the obligation, to purchase (call) or sell (put) an option whose price is based on the underlying SET50 Index, at a specified time and price. The buyer pays a premium for the right to buy or sell the options. SET50 Options enables investors to limit their losses to the premium paid. Moreover, options provide protection when the market is down, and can be employed to enhance returns when market rises to meet investors’ expectations, Ms. Kesara added. Transactions require no physical settlement, and the buyer may gain from the difference between the final settlement and exercise prices. The final settlement price is calculated from the SET50 Index on the last trading day for each options series. An options contract is about one-fifth the size of a SET50 Futures contract and worth THB 200 per index point. In regard to margin requirements, there are initial and maintenance margins. An initial margin is required before trading options, while a maintenance margin is required as the minimum collateral in a seller’s account. Because an options contract seller gives the right to the buyer to buy or sell, the seller has an obligation to buy or sell from the buyer once the purchased right is exercised. This means that the contract seller may lose more than the premium gained, hence front-end collateral must be pledged. On the other hand, a contract buyer’s loss is limited only to the premium paid, thus there is no need to pledge collateral to cover potential shortfall. “People with derivatives trading accounts can start trading options on October 29, after paying a brokerage fee at a fully negotiable rate. Those who do not have an account can open one during the Options Day on October 13 - 14. They can also join the Futures Society and become eligible for prizes from the Lucky with TFEX campaign, which runs for the first six months of options trading,” Ms. Kesara said. For more information about options and futures, and the upcoming seminars and activities, please visit TFEX’s website at www.tfex.co.th, Thailand Securities Institute’s website at www.tsi-thailand.org, or call SET Call Center 0-2229-2222.