Flex options are new derivatives instruments to trade in Index Options. An investor has the flexibility to choose the underlying features and can design a customized option for oneself.

Options are financial derivatives traded on organized exchanges. Option gives a buyer the right (but not the obligation to buy or sell the contract), while the seller has an obligation to honor the contract. The options market is growing fast, mainly because of it's attractiveness compared to that of spot or futures market.

FLexible EXchange Options (FLEX Options) were initially introduced in Chicago Board of Options Exchange (CBOE) in 1993 to trade in index options and are mostly traded in European terms rather than American terms. This is a customized derivative product wherein the investor can specify characteristics such as the strike price or expiration price, expiry month and date, and the underlying index. It is the latest risk management instrument where the investor can have customized derivative product. Such type of options is mainly used by large institutions that approach the OTC market for their tailor-made needs.

Option Clearing Corporation (OCC) was the first clearing organization to develop a sophisticated margin system based on option price theory and modern portfolio theory. The OCC marks prices on a daily basis for all outstanding FLEX options. These marked prices are available to OCC clearing members. It is through the OCC that FLEX options are issued, cleared and guaranteed.

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