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System and method for creating and trading packaged collar options on an exchange

  • US 8,386,374 B2
  • Filed: 02/17/2012
  • Issued: 02/26/2013
  • Est. Priority Date: 05/04/2005
  • Status: Active Grant
First Claim
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1. An exchange for creating and trading a package of option contracts, the exchange comprising:

  • an exchange backend system, the exchange backend system comprising a processor configured to;

    identify an underlying asset for which standard options contracts are traded on the exchange at the electronic trading platform;

    select one of a call option contract or a put option contract for the underlying asset as a first leg of an option collar;

    select an unselected one of the call option contract or the put option contract for the underlying asset as a second leg of the option collar, wherein the second leg is selected based on a strike price of the first leg; and

    list the first and second legs of the option collar as a single packaged instrument on the exchange;

    andan electronic trading platform in communication with the exchange backend system, the electronic trading platform configured to;

    accept orders from investors to take positions in the packaged instrument; and

    execute orders by matching orders to take opposite positions in the packaged instrument.

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