OEX index

OEX is the ticker symbol for the S&P 100 index, a subset of the S&P 500 made up of roughly 100 of the largest, most established U.S. companies. Because these are heavily traded blue-chip stocks, the OEX serves as a benchmark for large-cap performance, and options on the index give investors a way to trade or hedge the broad market with a single contract.

OEX options debuted on the Chicago Board Options Exchange (Cboe) in 1983 as the first listed index options. Like other index options, they are cash-settled: since you cannot deliver an index, an exercised in-the-money contract settles for the cash difference between the strike price and the index value, multiplied by 100. A notable feature of standard OEX options is that they are American-style, meaning they can be exercised any day up to expiration, whereas most other broad index options (like the S&P 500's SPX) are European-style and can only be exercised at expiration.

Investors use OEX options to speculate on the direction of large-cap stocks or to hedge a diversified portfolio. An investor worried about a market decline, for example, could buy OEX puts rather than buying separate puts on every stock they own.

Index options appear on the Series 6, Series 7, and SIE exams. Test-takers should recognize the OEX as the S&P 100, understand cash settlement, and know how index options differ from equity options in exercise style and settlement.