ISDEX (Internet Index) Futures and Options Information

It is a stock index for today's economy, providing the best market measure of the dynamic, growing Internet Industry. It is the Kansas City Board of Trade and the internet.com Corporation, respected experts in their fields. It is futures and futures options contracts that offer an reliable, viable, proven and affordable way to trade and invest.

The ISDEX is a modified capitalization-weighted index. At the end of each calendar quarter, all "large stocks" within the ISDEX are reviewed and reweighed (up or down) to 10% of the total capitalization of all stocks within the ISDEX. The index is reviewed quarterly to add or delete stocks, although mergers, acquisitions or other significant actions can make it necessary to replace a stock during a quarter.

A Financial instrument for today's economy

With its explosive growth in recent years, the Internet has become an important part of today's economy, enabling millions of people to obtain and share information and to conduct business electronically. It has become a vital communications tool.

Similarly, the Internet has become an important sector for investment. The ISDEX measures Internet stocks better than any other indicator, and thus may best be described as the stock index for the information/Internet age.

ISDEX contracts combine the exciting, growing significance of the Internet with the compelling liquidity, leverage and financial strength of the futures industry.

Offered by experts in their fields

The Kansas City Board of Trade, the exchange listing the ISDEX futures and futures options contracts, is a leader in the field of finance. The exchange has been trading futures contracts for more than 120 years, and prides itself on a heritage of integrity and service.

Agricultural leaders around the globe look to the Kansas City Board of Trade for the benchmark price of bread wheat, and the exchange provides a benchmark for the energy industry as well with western natural gas. The KCBT pioneered the very concept of stock index futures worldwide when it launched the Value Line and Min Value Line, and offers a revolutionary product once again with the ISDEX.

The creator of the ISDEX, internet.com Corporation, has extensive expertise in the Internet arena. The internet.com network (www.internet.com) includes award winning Websites, e-mail newsletters, online discussion forums and moderated e-mail discussion lists for Internet industry and technology professionals, Web developers and sophisticated Internet users.

Together, the Kansas City Board of Trade and internet.com Corporation are a team of experts.

A proven way to trade

Futures Trading has been around for well over a century, and has proven itself as a viable, reliable, affordable way to invest for many investors. The products traded at an exchange have behind them the fill force and protection of the rules of the exchange itself, as well as the rules of federal regulators. The exchange's clearinghouse ensures the financial integrity of all transactions, and the open market of an exchange floor ensures that any investor at any given time can know what his futures or futures options contract is worth.

An added economic benefit of using futures and futures options market for many investors is lowered transaction costs. For example, an investor interest in buying Internet Stocks can in one transaction purchase a Kansas City Board of Trade ISDEX futures contract representing 50 Internet Stocks, rather than buying an paying a commission on each stock separately in 50 different transactions.

For investors seeking to manage the risk of investing in the volatile Internet sector, ISEX futures and futures options serve as a hedging, or risk-reduction tool. For those seeking to invest in the market direction of the Internet sector as a whole rather than solely in individual stocks, the ISDEX provides a straightforward, one-stop Internet trading vehicle.

Based on the leading market measure

The ISDEX, an acronym for the Internet Stock Index, is the leading and most widely followed Internet stock index in the marketplace. The ISDEX is not another broad-based technology index - its focus is much more narrow. The ISDEX is the Internet, is an index. Specifically, the ISDEX contains 50 stocks of publicly traded US companies that derive revenue primarily from the Internet.

But while the focus of the ISDEX is narrowed specifically to the Internet, it is broad-based in the sense that it represents the diversity of the industry. The creator of the ISDEX, internet.com Corporation, using its own and third-party data determined that the ISDEX represented 95% of the capitalization of the Internet stock universe on February 12, 1999.

That broad representation of the entire Internet industry makes the ISDEX an excellent vehicle for investors interested in investing in the Internet as a whole, rather than solely in individual Internet Stocks.

The ISDEX is a modified capitalization-weighted index, restricting the weighting of the largest component stocks so that no single stock has an excessive influence. Stock listings are reviewed quarterly and on an as-needed basis in special circumstances such as mergers and acquisitions keep the ISDEX on the top of the market.

Internet Stock Index ISDEX Futures

The Market: Kansas City Board of Trade
Trading Hours: 8.30 am to 3.15 pm, Central Time
Contract Unit: $25 x Futures Price
Ticker Symbol/Quotation Symbol: IS
Underlying cash Index: ISDEX
Delivery Months: March, June, September, December
Price Quotation: Index Points
Maximum Daily Fluctuation: There are no limits on the upside. First day down-side limits correspond to a 5%, 10%, 15% and 20% decline below the previous day's settlement price. Consult the exchange for more information
Speculative Position Limits: 5,000 contracts net long or short in all months combined
Delivery Mechanism: Since this is a cash settled contract, the ISDEX cash index value at the close of trading on the last trading day will be used to settle all remaining open positions.
Last Trading Day: 3.15 pm central rime on the third Friday of the contract month. If that day is not a business day, then trading will end at 3.15 pm the preceding business day.
First Notice Day: Not applicable (cash settled contract)
First Delivery Day: Not applicable (cash settled contract)

Internet Stock Index Futures Options

The Market: Kansas City Board of Trade
Trading Hours: 8.30 am to 3.15 pm, Central Time
Underlying Asset: One KCBT ISDEX futures contract. For those option contracts that expire in months (serial months) other than those of the underlying futures contract (quarterly cycle), the underlying contract is the next futures contract nearest the option expiration month.
Ticker Symbol/Quotation Symbol: Calls ISC Puts ISP
Contract Months: Two nearest serial months and three nearest quarterly months
Strike Price Intervals: Integral multiples of five index points (ie 550.00 points, 555.00, 560.00 etc)
Listing of Strikes: New strikes are listed to maintain 30 above and 30 below the strike nearest the previous day's settlement price of the underlying futures contract. No new strikes are added during the last sex (6) trading days. Strikes are delisted when they have no trading activity or open interest for 10 consecutive days.
Price Quotation: Index Points
Minimum Price Fluctuation: .25 point ($6.25 per contract)
Maximum Daily Price Fluctuation: There are no limits on the upside. Downside limits correspond to the underlying futures contract. Consult the exchange for more specific information.
Speculative Position Limits: 5,000 contracts net long or short in all months combined.
Last Trading Day: 3.15 pm Central Time, on the third Friday of the contract month. If that day is not a business day, then options trading will end at 3.15 pm the preceding business day.
Exercise: Any time prior to expiration by giving notice to the KCBT Clearing Corp by 4.00 pm Central time, on any trading day up to and including the last trading day.
Automatic Exercise: Yes

Reprinted from the ISDEX Futures and Options publication from the Kansas City Board of Trade. You may order a free copy of this brochure by clicking here. The Kansas City Board of trade's website is www.kcbot.com. All information taken from this publication is believed to be reliable, but no representations or warranties of any kind can be applied to this information. There is a risk of loss trading futures and options on futures. Only risk capital should be used.