ISE Revere Wal-Mart Supplier Index

From MarketsWiki
Jump to: navigation, search

The proprietary ISE-REVERE Wal-Mart Supplier Index tracks the performance of companies that derive a substantial portion of their revenue from Wal-Mart Stores. This is a unique situation in which the world’s largest retailer has spawned a sub-industry of dependent companies, including many that are common household names, including. Mattel, Activision, Energizer Holdings, Hanesbrands, Kellogg's, Clorox Co. and Hasbro are a few of the 30 underlying companies in the Index. The goal of the Index is to be the benchmark of that sub-industry.[1]

Dozens of U.S. exchange-traded companies receive 10%, 20%, even 40% or more of their total revenues from Wal-Mart and its subsidiaries in 13 countries with 1.8 million employees. Interestingly, companies trading on a major U.S. exchange are required to disclose customer relationships accounting for 10% or more of total sales, and that's where Revere Data comes into the picture; through the Revere Relationships database, these company-to-company connections are captured. This database, together with the index methodology forms the basis of the ISE-REVERE Wal-Mart Suppliers Index.

The Index uses a "modified market-cap weighted" methodology due to the diversity in market capitalization size among certain component stocks. It sets the weight of each stock to a multiple of the weight of the smallest stock, based on its market capitalization ranking within the portfolio. The resulting linear weight distribution prevents a few large component stocks from dominating the index while allowing smaller companies to adequately influence index performance. Index components are reviewed semi-annually for eligibility, and the weights are re-set according to that distribution.

As of Nov. 1, 2007, there are 31 ISE index options listed.

Contract Overview

Full specifications can be found at the ISE web site.[1]

Trading hours 9:30 A.M. - 4:00 P.M. Eastern Time (New York time).
Expiration months Four near-term months followed by one additional month from the March quarterly cycle (March, June, September and December).
Strike price intervals At least $2.50.
Minimum trading increments The minimum trading increment for an options contract trading at less than $3.00 is $0.05. The minimum trading increment for an options contract trading at $3.00 or higher is $0.10.


References

  1. 1.0 1.1 Product Details. International Securities Exchange.