Nasdaq OMX is unveiling an alpha index options contract on April 18, 2011, Financial Times reports. The contract will measure the outperformance or underperformance of individual stocks as compared to the general market and will convert the difference into an index value. The investors currently trade an over-the-counter version of the contract.
Robert Whaley, a professor at Vanderbilt University in Nashville, is one of the creators of the new contract, which will launch based on the performance of 19 individual stocks, including Apple and Cisco. Susquehanna International Group, Wolverine and Citadel will be the market makers for alpha options contract, which may also be expanded to the performance of oil and gold relative to the S&P 500.
Click here for the story from Financial Times.