ISE Clean Water Index
The International Securities Exchange offers cash-settled options on its proprietary ISE Clean Water Index (HHO).[1] Index components include companies engaged in water distribution, water filtration, flow technology, and other water solutions.[2]
Related water instruments[edit]
ETFs on HHO[edit]
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 Water Index.
USFE futures on ISE Homebuilders Index[edit]
Additionally, the U.S. Futures Exchange (USFE) listed a futures contract on the ISE Water Index (FHHO) in 2007.[3]
Background on water industry[edit]
Companies with exposure to the global water industry have recently emerged as a compelling investment themes. Increasing privatization of water system assets, an aging infrastructure, costly new regulatory guidelines, population increases in water-stressed regions, and industry consolidation have focused attention on companies with significant exposure to water. As a natural resource with no substitute, water is considered by many to have similar characteristics to oil -- available supply is limited, and demand will increase exponentially from expanding global population and industrial demand.
Components and weighting[edit]
With more than 30 underlying stocks in the index[4] , it uses a modified market capitalization-weighted methodology to create a more uniform weight distribution. This prevents a few large component stocks from dominating the index but still promotes portfolio diversification by retaining the economic attributes of capitalization ranking. Semi-annual reviews and rebalancing events are used to “re-set” the weighting of each component such that each component has a proportionate influence on the index performance.
ISE Water Index Option Contract Overview[edit]
Full specifications can be found on 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 Water Index Futures Contract Overview[edit]
Underlying: ISE Water™ Index
| Quotation | Index Points |
| 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 |
| Screen Price | 9999.95 |
| Settlement | Cash Settled |
References[edit]
- ↑ "Product Details: Contract Specs”. International Securities Exchange.
- ↑ ISE Clean Edge Water Index (HHO). Cleanedge.com.
- ↑ "ISE Indexes”. US Futures Exchange.
- ↑ "ISE Water Index Components”. International Securities Exchange.