Definition
American Stock Exchange (AMEX)
The American Stock Exchange (AMEX) refers to the third-largest options exchange in the United States, headquartered at 86 Trinity Place in Lower Manhattan, New York City. The AMEX is recognized for pioneering index options on 25 broad-based and sector indices. In 2008, the AMEX was acquired by NYSE Euronext. Its trading environment incorporates advanced electronic trading technology while still maintaining a human-based open outcry trading system for investors who favor traditional methods.
Examples
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Index Options Pioneering:
- AMEX introduced the concept of index options, allowing investors to trade options based on the performance of a large index such as the S&P 500.
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Hybrid Trading Environment:
- While many trades are conducted electronically, select trades still occur via the open outcry system, enabling human brokers to negotiate and execute trades on the exchange floor.
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Sector Indices:
- AMEX created options on sector indices, such as technology and healthcare, enabling more focused investment strategies.
Frequently Asked Questions
What is the American Stock Exchange (AMEX)?
The American Stock Exchange (AMEX) is a major options exchange in the United States known for pioneering index options. It operates a hybrid trading system combining electronic and open outcry methods.
When was AMEX acquired by NYSE Euronext?
AMEX was acquired by NYSE Euronext in 2008.
What trading methods does AMEX use?
AMEX utilizes a combination of largely automated, electronic trading systems and a human-based open outcry trading method.
What are index options?
Index options are options contracts that derive their value from an underlying index, such as the S&P 500, allowing investors to trade based on the index’s performance.
Where is the AMEX located?
The AMEX is located at 86 Trinity Place in Lower Manhattan, New York City.
Related Terms
1. NYSE Euronext:
- A global exchange group formed by the merger of the New York Stock Exchange and Euronext. It acquired AMEX in 2008.
2. Index Options:
- Options contracts that are based on the value of an underlying index, giving investors the ability to trade on the performance of entire market indices.
3. Open Outcry:
- A traditional trading method where traders physically shout bids and offers on a trading floor.
4. Electronic Trading:
- The use of computer systems and networks to facilitate the trading of financial products electronically.
5. Sector Indices:
- Indexes that track the performance of specific market sectors such as technology, healthcare, or utilities.
Online References
- NYSE Official Website
- Investopedia: American Stock Exchange – AMEX Definition
- SEC Historical Society: AMEX
Suggested Books for Further Studies
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“Options as a Strategic Investment” by Lawrence G. McMillan
- This comprehensive guide covers the various strategies that can be implemented in options trading.
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“The Handbook of Equity Market Anomalies: Translating Market Inefficiencies into Effective Investment Strategies” by Leonard Zacks
- Discusses various market inefficiencies, including those relevant to options trading.
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“Market Wizards: Interviews with Top Traders” by Jack D. Schwager
- A collection of insightful interviews with some of the most successful stock and options traders.
Fundamentals of Stock & Options Exchange: Finance Basics Quiz
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