International Gold Options Exchange (IGO)
The International Gold Options Exchange (IGO) was a commodities exchange located in Chicago, Illinois, that specialized in the trading of gold options contracts. It was established in 1982 by a group of investment banks and gold traders as a way to facilitate the trading of gold options in a centralized and regulated environment.
History and Operations
The IGO operated as an electronic exchange, allowing traders to buy and sell gold options contracts remotely. It used a standardized contract size of 100 troy ounces of gold, with prices quoted in U.S. dollars per troy ounce.
The exchange offered a variety of gold options contracts, including call options, put options, and spreads. Call options gave holders the right to buy gold at a set price (the strike price) on or before a certain date (expiration date). Put options gave holders the right to sell gold at the strike price on or before the expiration date.
Traders used gold options contracts for a variety of purposes, including hedging, speculation, and arbitrage. The IGO provided a platform for these activities by offering a liquid and transparent market for gold options.
Merger and Closure
In 2004, the IGO merged with the Chicago Mercantile Exchange (CME). The CME had a larger and more established market for gold futures, and the merger allowed the combined exchange to offer a wider range of gold-related products.
After the merger, the IGO continued to operate as a separate division of the CME. However, in 2014, the CME announced that it would be closing the IGO due to declining trading volume. The IGO officially ceased operations on May 2, 2014.
Legacy
Although the IGO is no longer in operation, it played an important role in the development of the global gold market. It provided a centralized and regulated platform for the trading of gold options, and it helped to increase the liquidity and transparency of the gold options market.
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