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Options Traders Flock To GLD ETF

Options traders are flocking to the recently-approved options on the GLD Gold Trust, an exchange traded fund backed by gold, and causing options exchanges to expand the maximum number of traders permitted to make markets in the options. The Philadelphia Stock Exchange, which would typically cap the maximum number of quoters in a new options class to 12, is expanding that number to 22, which is usually allowed for top 5% of the top traded options. The Chicago Board Options Exchange is going even further, expanding its cap on the maximum number of market makers to 75 from 50. "CBOE anticipates that there will be substantial trading volume in this class. In addition, increasing the class quoting limits to 75 will accommodate market makers that are currently on the wait list to be appointed to the option class," CBOE officials wrote in a related rule filing. The more market makers there are in an options class, the deeper the markets, but the caps prevent market makers from having too little business. Several traders attributed the interest to long-term interest in commodities and the gold market undergoing a correction.

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