ISE-Revere Natural Gas Index
The International Securities Exchange lists options on a proprietary cash-settled ISE-Revere Natural Gas Index (FUM) that allows investors to take advantage of event-driven news and long-term trends in the natural gas industry. The securities selected for the index derive a substantial portion of their revenues from exploration and production of natural gas.
Related natural gas index instruments
- In February 2007, ISE announced that it had entered into an agreement with First Trust Advisors L.P., an investment management firm, to create and list exchange-traded funds (ETFs) on the ISE-Revere Natural Gas Index.
- Additionally, the U.S. Futures Exchange (USFE) listed a futures contract on the ISE-Revere Natural Gas Index (FFUM) in 2007.
Components, capitalization and weighting
With 30 component stocks, the Index uses an equal-weighted methodology due to the diversity in market capitalization size among the component stocks. The resulting uniform weight distribution prevents a few large component stocks from dominating the index and potentially distorting an index return that is representative of an industry sector. Quarterly rebalancing events are used to “re-set” the weighting of each component so that each component has an equal influence on the index performance.
The Index is calculated and maintained by Standard & Poor’s based on a methodology developed by the ISE and Revere Data in consultation with Standard & Poor’s.
ISE-Revere Natural Gas Option Contract Overview
Full specifications can be found at the ISE web site.
|Trading hours||9:30 A.M. - 4:00 P.M. Eastern Time (New York time).|
|Expiration months||Four near-term months followed by one additional month from the March quarterly cycle (March, June, September and December).|
|Strike price intervals||At least $2.50.|
|Minimum trading increments||The minimum trading increment for an options contract trading at less than $3.00 is $0.05. The minimum trading increment for an options contract trading at $3.00 or higher is $0.10.|
As of Nov. 1, 2007, there are 31 ISE index options listed.
USFE ISE-Revere Natural Gas Index Futures Contract Overview
Underlying: ISE-Revere Natural Gas™ Index
|Contract Size||$100 per Index Point|
|Minimum Tick Size||0.05|
|Minimum Calender Spread Tick Size||0.01|
|Outright Tick Value||$5|
|Minimum Size for Block Trade||50 contracts|
|Mistrade Parameters||30 ticks|
|Reportable Positions||200 contracts|
|Position Limits / Accountability||Limits at 25,000 contracts|