ISE Integrated Oil and Gas Index

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International Securities Exchange offers options on the cash-settled ISE Integrated Oil and Gas Index (PMP). This ISE proprietary index includes companies engaged in the exploration, production, refining, marketing and transportation of oil and gas. Members include BP, Exxon Mobil, Chevron and Royal Dutch Shell.

Though the index names are similar, the ISE Integrated Oil and Gas Index is starkly different in composition than its ISE Oil and Gas Services Index, which includes oil and gas drilling contractors, equipment manufacturers and suppliers, and service providers involved in drilling, evaluation and completion of oil and gas wells.

With 20 component stocks, the ISE Integrated Oil and Gas Index attempts to capture at least two-thirds of the entire sector's capitalization. Due to the non-uniform weight distribution across entire industries, an equal-weighted methodology or a "modified market capitalization-weighted" methodology is used to adjust the weighting of component stocks, and individual component weightings are limited to 25 percent at semi-annual reviews. Quarterly rebalancing events are used to "re-set" the weighting of each component so each component has an equal influence on the index performance.

The ISE Integrated Oil and Gas Index is one of eight ISE industry indexes that also include: ISE Oil and Gas Services; ISE U.S. Regional Banks; ISE Semiconductor; ISE Gold; ISE Semiconductors; ISE Biotech & Pharmaceuticals; ISE Homebuilders and ISE SINdex.

As of November 1, 2007, there were 31 ISE index options listed.

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.