FLEX® Options Explained

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FLEX® Options

FLexible EXchange® Options, or FLEX® Options, were introduced by CBOE in 1993. They were designed to give institutional investors greater access to customized derivatives. FLEX® options provide customization features similar to over-the-counter (OTC) options but with the convenience and guarantee of exchange-traded options.

Similar to OTC options, FLEX® options allow contractual terms such as expiration date, exercise price, style and contract size to be individually specified.

Unlike OTC options, FLEX® options are traded through the exchange, with the Options Clearing Corporation (OCC) being the issuer and guarantor of all FLEX® option contracts. As the OCC is the largest derivatives clearing organization in the world as well as the first to be awarded a “AAA” credit rating from Standard & Poor, the trading of FLEX® options is considered to be virtually free of counterparty risk.

Index FLEX® Options

The first types of FLEX® options to be introduced were FLEX® option contracts on stock market indices and hence they are often simply referred to as FLEX® options. Index FLEX® options are available on all CBOE listed indices, including the following major indices:

Equity FLEX® Options

Following the success of Index FLEX options, CBOE launched FLEX® options on individual equities in 1995 and they were known as E-FLEX® options. E-FLEX® options are available on a wide range of actively traded underlying stocks and they include most option classes that are listed at CBOE.

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Flexible Exchange Option (FLEX)

What Is a Flexible Exchange Option?

Flexible exchange options, or FLEX options, are non-standard options that allow both the writer and purchaser to negotiate various terms. Terms that are negotiable include the exercise style, strike price, expiration date, as well as other features and benefits. These options also give investors the opportunity to trade on a larger scale with expanded or eliminated position limits.

Key Takeaways

  • FLEX options are a specialized kind of option offering extreme negotiable flexibility.
  • FLEX stands for flexible exchange option.
  • These options do not have regular quote streams but publish quotes only by request.

Understanding Flexible Exchange Option (FLEX)

FLEX options were created in 1993 by the Chicago Board Options Exchange (CBOE). The options target the over-the-counter (OTC) market of index options and provide customers with more flexibility. FLEX options now trade on other exchanges as well as the CBOE.

Aside from allowing both the buyer and seller to customize contract terms to their liking, FLEX options provide other benefits. These benefits include protection from counterparty risk associated with over-the-counter trading. Trades are guaranteed by the Options Clearing Corporation (OCC) as are other exchange-traded options.

The market is also more competitive and transparent for increased liquidity. A secondary market allows buyers and sellers to offset positions before expiration. This secondary market removes some of the risks of trading in off-exchange markets.

A significant difference between FLEX options and traditional options is that FLEX options do not have a continuous quote stream. Therefore, the generation of a quote for FLEX options occurs only when a request for quote (RFQ) is made.

In 2007, The CBOE launched CFLEX, an Internet-based, electronic trading system for index and equity FLEX options. Traders enter daily orders into the FLEX electronic book.

Components of a FLEX Option Contract

The minimum size for a FLEX option is one contract. Strike prices may be in penny increments and may also be in the equivalent of a percentage of the underlying stock.

Representation of premiums may be in the value of specific dollar amounts and are typically in penny increments, or in percentages of the underlying stock.

An expiration date can be any business day and can be future-dated as far as 15 years from the date of the trade. Expiration styles may be American or European. American expiration allows for exercise at any time before the contract ends. European expiration permits exercise only at the expiration date.

Equity FLEX options, both puts, and calls, settle with the delivery of shares of stock if exercised. Index FLEX options will settle in cash.

Position Limits for Flexible Exchange Options

There are no position limits for FLEX options on major market indexes, including the Dow Jones Industrial Average, Nasdaq-100, Russell 2000, S&P 500, and S&P 100. However, there are reporting requirements if position sizes exceed certain thresholds.

The position limits for broad-based Index FLEX Options, other than those listed above, are 200,000 contracts, with contracts being on the same side of the market for each given index.

There are no position limits for equity or ETF FLEX options, although there are reporting requirements.

FLEX Options Product Specifications

Description

FLEX options are customizable products where the investor can set the terms for the tradable contract and have the security of an exchange-traded product. The exercise style, expiration date and strike price can all be chosen by the investor to create a new product that is not currently being traded at an exchange. In general, investors set the criteria and have their brokerage firm solicit the best possible market-price from different market participants.

Unit of Trade

Equity or ETF: 100 shares per option contract.
Index: One contract equals $100 (the index multiplier) times the index level.

Premium Quotations

Stated in points. One point equals $100.

Strike Price Intervals

The investor selects the strike price for the FLEX contract.

Exercise Style

The investor chooses between either American or European exercise when the contract terms are chosen.

Exercise Settlement Time

Equity and ETF FLEX settlement will occur on the second (T+2) business day following exercise. For Index FLEX, settlement will be the first business day following exercise.

Expiration Dates

The investor selects the date for the FLEX options to expire, within exchange rules.

Exercise Settlement Price for Index FLEX

Cash-settled FLEX options on index products will derive their settlement price depending on whether the investor has selected a.m. or p.m. settlement for that particular FLEX option. The dollar difference between the index settlement value and the strike price of the contract multiplied by 100 will be the value of the contract. (Note: See product specifications for each index as there may be different methods of calculation.)

Position Limits

No position limits for equity or ETF FLEX, however reporting obligations do apply. Check with exchange for Index limits.

Minimum Customer Margin

Purchases of puts or calls with nine months or less until expiration must be paid for in full. Writers of uncovered equity puts or calls must deposit / maintain 100% of the option proceeds* plus 20% of the aggregate contract value (current equity price x $100) minus the amount by which the option is out-of-the-money, if any, subject to a minimum for calls of option proceeds* plus 10% of the aggregate contract value and a minimum for puts of option proceeds* plus 10% of the aggregate exercise price amount. Margin requirements for index products and some broad-based ETFs may vary.

(*For calculating maintenance margin, use the option’s current market value instead of the option proceeds.)

Trading Hours

FLEX options will have the same trading hours as monthly options for that product.

This web site discusses exchange-traded options issued by The Options Clearing Corporation. No statement in this web site is to be construed as a recommendation to purchase or sell a security, or to provide investment advice. Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options. Copies of this document may be obtained from your broker, from any exchange on which options are traded or by contacting The Options Clearing Corporation, 125 S. Franklin Street, Suite 1200, Chicago, IL 60606 ([email protected]).

© 2020 The Options Clearing Corporation. All rights reserved.

Flex™ Meals Explained

Here at Nutrisystem, we don’t just want to help you lose weight and live healthier right now, we want to teach you healthy habits so you can maintain your weight loss success for the rest of your life. That’s why the diet plan includes Flex™ Meals—meals you create using guidelines we provide. Once you wrap up your first week, you’ll get to create two healthy Flex™ breakfasts, lunches, dinners and snacks each week so you can practice healthy cooking and get prepared for life after Nutrisystem. (Check out the Flex™ Meals section of our Recipe Center for some delicious and simple Flex Meal ideas!).

So how do you know what to include in your Flex™ Meal?
What you make for your Flex™ Meal depends upon the meal occasion. Breakfasts, lunches dinners and snacks all have different guidelines. We’ve laid those guidelines out for you here:

On a personalized meal plan? Click here >

If you’re still a bit fuzzy on what SmartCarbs and PowerFuels are, check out this article, which explains these categories in detail.

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Regardless of your gender, you should always strive to include one to two servings of non-starchy vegetables at every Flex™ Meal occasion. This will help you feel fuller, and will get you closer to your weight loss goal of eating at least four servings of veggies a day. And don’t forget, you can add in as many Free Foods as you’d like, along with some Extras (just don’t exceed three Extras a day). Need help understanding the difference between Free Foods and Extras? We’ve got you covered here.

If you’re on Uniquely Yours Ultimate, you don’t have to worry abut Flexing. Just stick to your Nutrisystem foods for your meal occasions!

The Great Debate: Is It an Extra or a Free Food?

So what should you make?
To build your Flex™ Meals, you’ll want to consult with your Nutrisystem Grocery Guide to determine which SmartCarbs and which PowerFuels you’d like to include. Click on the images below for some examples of meals you could make using the specified guidelines. Or, if you’d rather not fuss, just visit our Flex™ Meals section in the Recipe Center for some delicious and easy recipes that fit perfectly with your diet plan!

SNACKS

Women and men follow the same guidelines for Flex™ snacks, so these are some options for both:

BREAKFAST

If you are a man or woman making a Flex™ breakfast, you might make:

LUNCH
If you are a woman making a Flex™ lunch, you might make:

If you are a man making a Flex™ lunch, you might make:

DINNER
If you’re a man or woman making Flex™ dinners, you might make:

Choosing the Right Shaft Flex in Your Golf Clubs

Understanding Golf Club Shaft Flex Can Help Improve Your Scores

If you want to avoid giving your golf game the shaft, you need to understand the effect that golf club shaft flex has on your game.

“Flex” refers to the ability of a golf shaft to bend as forces are applied to it during the golf swing. Those forces are generated by the type of swing that you have: fast or slow, smooth or jerky.

There are five generally used ratings for shaft flex: Extra Stiff, Stiff, Regular, Senior and Ladies, usually denoted by the letters X, S, R, A and L (“A” is used for Senior because this flex was originally called “amateur”).

Having a flex that doesn’t match the needs of your swing will result in the clubface being misaligned at impact, causing your shots to go off-target.

What Shaft Flex Impacts

Shaft flex impacts, either directly or indirectly, the accuracy, trajectory and distance of your shot. Three pretty important things in golf.

As the shaft flexes throughout the swing, the position of the clubhead changes. And the face of the club must be square (perfectly straight, or parallel to the target line) at impact to get the most out of the shot. If you have the wrong flex for your swing, there is less chance that you’ll make contact with the ball with a square clubface.

Some General Guidelines About Shaft Flex

The degree of flex in your club shafts is something you control. You can choose to buy stiffer shafts, or softer shafts, depending on your needs.

But how can you tell what you need? Here are some general guidelines:

  • Take a look at the distance you hit your driver. This is a good, but very general, indicator. If you carry you driver 250 yards or more, go with Stiff; 230-250 yards, Regular; 200-230 yards, Senior; less than 200 yards, Ladies. Only the biggest of the big hitters is going to need Extra Stiff. For most of us, Extra Stiff isn’t even in the picture.
  • If you have a very smooth swing, you might benefit from a softer flex even if you swing fast. A swing that gets jerky at the top—when transitioning into the downswing—will probably need a stiffer shaft.
  • If your drives go left, you might benefit from a stiffer flex; if your drives go right, you might benefit from a softer flex.

If Your Shaft Flex Is Too Stiff .

What effect does a too-stiff shaft have on your golf game?

  1. The ball will probably fly lower and shorter for any given loft, compared to a properly fit shaft.
  2. The ball may tend to go to the right, or fade side, for right-handed golfers because with a too-stiff shaft the clubface is harder to square (the clubface is more likely to be open at impact, in other words).
  3. The shot may feel less solid, more like a mishit even if you make contact on the center of the clubface.

If Your Flex Isn’t Stiff Enough .

  1. The ball might fly higher for any given loft, compared to a properly fit shaft.
  2. The ball may tend to go left, or to the draw side, for a right-handed golfer (because with a too-flexible shaft, the clubhead may tend to come into the ball closed).
  3. Shots may tend to feel more solid, even when they aren’t.

Oh, Those Macho Men

Men like to hit golf clubs with Stiff shafts. It’s a guy thing. Unfortunately, it’s not always the smart thing.

No macho man wants to be seen hitting a wimpy little Regular flex club, or, Tiger Woods forbid, a Senior or Ladies flex.

But over-swinging is a common problem among male high-handicappers. Choosing a softer flex often has the effect of forcing macho men to slow down their swings. And slowing down the swing often makes those macho men into better golfers.

And the fact is, the harm in hitting a shaft that is too flexible is much less than the harm in hitting a shaft that is too stiff. As equipment guru Tom Wishon has said, when unsure about flex, always err on the side of more flex (meaning, a softer shaft). If you can’t decide between Regular and Stiff, go with Regular.

The Foolproof Way to Choose Shaft Flex

A clubfitting with a golf professional is the recommended way to choose the proper amount of flex in your golf clubs.

The pro will take a lot of measurements, watch your swing, measure your swing speed, watch your ball flight and be able to recommend the flex that is right for you.

Clubfittings are available at many pro shops and almost all golf schools and from teaching professionals, at courses and full-service driving ranges. Dedicated clubfitters are also becoming more common.

If a club-fitting isn’t in your future, the next best thing is a demo day. At demo days, you’ll be able to hit many different types of clubs with different types of shafts. Or find a good pro shop with swing bays where you can try before you buy.

The key, short of a club fitting, is hitting lots of different clubs and watching the effect that changing shaft flex has on your shots.

If you find a flex that feels good and produces a good ball flight, there’s a good chance that’s the right flex for you.

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