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CFLEX

CFLEX
TradingStrategy and EducationOptions and Derivatives TradingOptions and DerivativesOptions Trading Strategy and Education

What Is CFLEX?

CFLEX is an electronic trading platform for customized options, run by the Chicago Board Options Exchange (CBOE) beginning around 2007. It permits traders to trade options with customizable variables consequently electronically and anonymously as opposed to taking care of each trade by hand in view of the unique terms of every option.

CFLEX is an extension of CBOE's flexible options exchange (FLEX) system for going into and reporting non-standard options positions on the exchange floor.

Grasping CFLEX

CFLEX is worked by the CBOE, a head options exchange that started in 1973 and was the main marketplace for traders and investors to trade derivative securities that were listed on the exchange. In 1993, CBOE made its FLexible EXchange (FLEX) options product, with the ability to pick one's own specific terms in an options trade.

Before FLEX, all customized options trades must be performed physically and over-the-counter (OTC) on the grounds that they were non-standardized and each has its own unique terms. Beside permitting both the buyer and seller to customize contract terms as they would prefer, FLEX options give other benefits. These benefits incorporate protection from counterparty risk associated with over-the-counter trading. Trades are guaranteed by the Options Clearing Corporation (OCC) as are other exchange-traded options.

CFLEX permits traders to trade muddled options effectively and basically through the internet. To trade through CFLEX, a trader needs to consent to a client arrangement with CFLEX and afterward start trading utilizing the internet-based platform either as a program based application or as an internet API.

CFLEX offers traders the ability to trade anonymously in real time with a price-time matching algorithm and live order books. It likewise has a secondary market to change terms or cancel out an order with another order, a feature that serves the function of closing a position, however for options, which at times can't technically be closed the manner in which stocks can.

Customizing Options Contracts

Options are a type of derivatives contract since they are derived from direct securities like stocks and bonds. You buy or sell a direct security outright. Buying a derivative gives you the right, yet not the obligation, to buy or sell a direct security at a certain time for a certain amount, and selling a derivative sells your right to do likewise. Derivatives contracts have subtleties that are undeniably more complex than a simple bid price or ask price for traditional assets like stocks. Exchange-traded options are standardized in these regards to keep up with efficient and transparent trading.

Selling options with customized subtleties required processing every sale physically, in light of the fact that it required finding a buyer, at times finding a seller, and matching this multitude of custom subtleties. At the point when a few options became listed on the exchange with standardized subtleties, they had the option to be traded electronically. In any case, technology and the minds of options traders didn't find the possibility of utilizing electronic trading to trade customized options until 2007.

Features

  • These customized options contracts don't have ordinary quote streams yet distribute quotes by request.
  • CFLEX is an electronic system for entering and reporting non-standard options trades.
  • Sent off in 2007 by the CBOE, CFLEX is a mechanical upgrade to its existing FLEX system.