‎SSOs start trading on Tadawul today

Tadawul trading screen

The Saudi Exchange (Tadawul) is set to launch single-stock options contracts today, Nov. 27, 2023.

During the first phase, investors will be able to trade options contracts for the following four companies Saudi Aramco, Al Rajhi Bank, stc and SABIC. This list could be expanded to include other companies in the future.

On Aug. 30, 2020, Tadawul launched the first exchange-traded derivatives product — MT30 Index Futures, an index futures contract based on the MSCI Tadawul 30 Index (MT30), marking the beginning of derivatives trading in the Kingdom. The table below indicates all derivatives products in the Saudi capital market:

Derivatives Products in Saudi Capital Market

Product

Rollout Date

Futures Contracts Index (MT30)

Aug. 30, 2020

Single Stock Futures (SSFs)

July 4, 2022

SSOs

Nov. 27, 2023

Single-stock options contracts are standardized contracts with a single stock as its underlying asset. It derives its value from the underlying asset (shares) and provides its holder the right and not the obligation to sell or buy the assets at defined price and dates.

The following table illustrates details of the SSOs:

Details of SSOs

Item

Details

Contract code

Single Stock Options (SSOs)

Underlying share

Aramco, Al Rajhi Bank, SABIC, stc

Contract Size

100 shares

Minimum price fluctuation–tick

SAR 0.01 valued at SAR 1

Contract months

Current month, next month and the next two quarters

Option Exercises

Manual Exercise request can be entered by long position holder anytime between trade date and expiry date and all ITM and ATM request will be exercised

On expiry date, all ITM and ATM strike with open position will be automatically exercised and all OTM strikes will be rejected

On expiry date, Members can Deny exercise on any open positon and which will expire with zero value

Assignment allocation for every exercise request will be done on a random basis

Minimum number of strikes available

Minimum 4 ITM (in-the-money), 4 OTM (out-of-money) and 1 ATM (at-the-money) will be always available for trading. More can be added if underlying price moves significantly

Strike Prices

Underlying Price

-25

SAR 1

Exercise Type

American style

Exercise Settlement Price

Closing price of underlying (applicable to Daily Exercise request and Exercise on expiry date)

Option Trade Premium & Exercise Settlements

T+1 for Derivatives MTM (Option premium MTM and Exercise/Assignment MTM in Derivatives will be settled on T+1)

Settlement Type

Physically Settled. Exercise Date +3 (E+3)