CBOE Traders Plan Refunds Tied to Oct. 20 --- Group Effort Could Total $2 Million to Customers In S&P Index Options
CHICAGO -- Chicago Board Options Exchange floor traders plan to make an unprecedented refund of up to $2 million to as many as 200 customers who traded certain stock-index options on Oct. 20, the day after the stock market crash, options industry officials said.</br></br>Trading losses in index options on Oct. 19 and 20 are estimated at several hundred million dollars nationwide, and were one of the single largest sources of investor complaints in the weeks following the crash, according to regulators.</br></br>CBOE officials declined to comment on the planned refunds to customers, who claimed they were overcharged for their options contracts in the market volatility immediately following the crash.</br></br>The nation's largest options exchange, which relies on stock-index options trading for more than half its volume, desperately wants to begin restoring investor confidence in the product, options traders say. Trading volume in stock-index options at the CBOE has plunged about 60% from pre-crash levels. The exchange also has reduced its staff since the crash by about 10% through attrition and layoffs.</br></br>But the refunds, while unprecedented in scope, aren't likely to restore investor confidence anytime soon in the options, industry officials say.