Tuesday, July 29, 2014

Equity index futures contract launch buttons

click photo to enlarge

I'm not sure when the tradition started, but it was widespread amongst futures exchanges by the 1980's to commemorate the launch of a new contract through buttons which could be pinned on a trading jacket.  These buttons would be handed out in the morning of the launch day at the entrance to the trading floor and generally be worn maybe for a day before being discarded pretty quickly thereafter.  Exchanges used these buttons to market, or at the very least to simply remind the finite amount of members on the trading floor of a new contract launch in hopes that they might step into that pit to trade it.  Illiquidity could doom a contract from the start so anything that would encourage bodies to trade something new would help a nascent contract gain momentum. 

In the past I've showcased various buttons from my collection w/individual photos but recently got a chance to categorize them into various groups like the equity index buttons shown above.  I'll try to put up other categories eventually, such as grains or fixed income, and provide the background on them as time allows.

1 - Probably the best of my collection is the S&P 500 button from 1982 whose graphic was based upon the STP fuels logo.  When the Spoos began trading, I don't think anyone could've expected the contract to be as hugely successful for the exchange as it has.  I actually have an extra one of these buttons, so if someone has an amazing memorabilia trade to offer I'd consider it but the bar is very high.  

2 - This button celebrated a decade of success for the S&P 500 contract in 1992 and incorporated that original button style into it.

3 - From 2007, this button also celebrates a milestone for the Spoos at 25 years.

4 - Just before celebrating a decade with the S&P 500, the CME launched the S&P 400 Midcap contract.

5 & 6 -This is a pair of buttons from the CME to celebrate the launch of options on the S&P 500 futures in 1983, a year after the futures contract proved successful.  One button has Pac-Man rebranded as Option Man eating his enemy Risk on the other button.

7 - I'm not 100% certain of this button as it represents the launch or expectation of launch for the S&P 100 in July 1983 and what confuses me is that the CBOE launched OEX options a few months earlier in March 1983.  Since I'm far away from various reference books I have, I'm not sure if there was an attempt by the CME for instance to launch S&P 100 futures around this time.

8 - Another button I'm not exactly sure on the background of because Value Line was the first stock index ever traded, predating the S&P 500 by a short period of time, and it traded at the KCBT but this button regarding options on the index also lists CBOT.  Perhaps there was a mutual offset agreement between the exchanges where it had dual listing, the closest guess I can come up with.

Line three, which has buttons 9 - 13, moves from the S&P suite to the interesting attempts surrounding the NASDAQ contract at both the CME and CBOT.  It's probably surprising to see, in button 13, that the CBOT actually licensed the original rights to list the NASDAQ-100 index in 1985.  To compete, the CME created the SPOC contract (S&P Over the Counter index) which was a broader listing of 250 nonfinancial contracts compared to 100 in the NASDAQ contract.  Button 9 is the original launch button for the SPOC and to encourage trading in the SPOC, button 10 asked for "15 minutes please" from traders to stand in the pit at least that much each day and try trading it.  A 15 minute button was also used for the launch of the S&P 500 and, from what I read, traders learned that 15 represented losses in thousands of dollars more so than minutes trading it as the true measure of their commitment.  Button 11 was distributed at the CBOT to take a jab against the SPOC contract, Lenoard Nimoy, aka "Spock" from Star Trek, is pictured with a red circle and backslash on top.  Both the CME's SPOC and CBOT's NASDAQ-100 contracts eventually failed but the relaunch of the NASDAQ-100 at the CME in 1996 is shown with button 12 and it continues to be a success.

14 - Nikkei 225 index futures were launched in 1990 with this button at the CME just as the Japanese stock market bubble collapsed.

15 & 16 - The AMEX Major Market Index, consisting of 20 blue chip stocks that closely followed the Dow Industrials, had futures traded at the CBOT starting in 1984.   Eventually the index was rebranded as the MAXI and then delisted after moving over to the CME.  Most notably, the MMI contract is famous for Blair Hull buying a large amount of MMI futures at the bottom of the market on the day following Black Monday in 1987. 

17 - Institutional Index button from the CBOT which I don't know anything about except it traded briefly and was doomed from inception since the launch preceded the 1987 crash by a month.  As even the S&Ps traded thinly following the crash, there was too much career risk to have anyone trade a new and narrower contract like the IX.

18 - Although I'm not sure if this CBOE OEX button was from the launch, it likely would've been given out not too long after because there is no need to promote what was the dominant index option listing.
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