Single Stock Options (SSOs) contracts will now bw the third derivatives product to be introduced in the Saudi Exchange, Tadawul. Image Credit: Shutterstock

Riyadh: Starting November 27, the Saudi Exchange will allow Single Stock Options (SSOs) contracts to be traded, which is the bourse's third derivatives product aimed at enabling local and international investors to hedge and manage portfolio risks effectively.

SSOs contracts are standard options contracts with an individual stock as its underlying asset, and the four underlying assets selected for the contracts are: Aramco, Al Rajhi Bank, STC, and Sabic. In the future, the Saudi Exchange will expand its suite of SSOs contracts to include additional companies, it added.

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The Saudi Exchange will launch physically settled US options, which are a type of financial contracts that require the actual delivery of the underlying asset that can be exercised at any time before expiration.

Speaking on the occasion, Mohammed Al Rumaih, CEO of Saudi Exchange, said: “The launch of SSOs reinforces the Saudi Exchange’s efforts to providing investors with diversified investment opportunities and tools to manage risk effectively, while increasing market liquidity.”

The Saudi Exchange launched the Derivatives Market in 2020, and has since introduced three derivatives products, including MT30 Index Futures (SF30), Single Stock Futures, and now Single Stock Options.