Method and system of trading a standardized contract

Abstract

A system, method, and corresponding computer program product facilitates trading of a standardized contract. The terms of the contract may be such that it provides a payout from one party to the other based on the price, yield, level or other measure of an asset, basket, index, financial contract, other financial instrument or some economically significant variable observed at or around two specified times, both such times being after the time that the standardized contract is first available for trading. Alternatively, the terms of the contract may be such that it provides that one party has the right but not the obligation either to purchase or to sell some asset at a price which is determined at a first specified time, such right to be exercised at some time not later than the second specified time, both such times being after the time that the standardized contract is first available for trading. These and other related contracts are described.

What is claimed is: 
     
         1 . A computer-implemented method for trading, between a buyer and a seller at an exchange, a futures exchange, an options exchange, a futures and options exchange, or other trading facility, the method being performed on a computer system, the method comprising:
 receiving, by the computer system, first inputs from the buyer and seller corresponding to a standardized form of contract under which the buyer agrees to acquire and the seller agrees to grant a number of options exercisable or maturing after a reference time;   receiving, by the computer system, second inputs from the buyer and the seller wherein the second inputs include at least one bid price and at least one offer price for the standardized form of contract; and   matching, in the computer system, the first inputs and the bid prices and the offer prices and forming a contract based, at least in part, on the matching;   wherein at least one of (i) the number of options, (ii) the price(s) of the options, (iii) the strike price, and (iv) one or more terms of the options are being determined, in accordance with the contract specifications, by reference to the level of an underlying at said reference time, the underlying being a specified observable quantity selected from a group consisting of a stock price, a commodity price, a financial asset price, a basket of financial assets price, a financial index value and a financial contract price; and   wherein the contract is available to trade before said reference time.   
     
     
         2 . The computer-implemented method of  claim 1 , wherein the contract is traded by telephone, internet, or a wide area network. 
     
     
         3 . A computer-implemented method for submitting trade order information to an exchange, a futures exchange, an options exchange, a futures and options exchange, or other trading facility, the method being performed on a computer system, the method comprising:
 transmitting, by the computer system, first outputs corresponding to a standardized form of contract under which the buyer agrees to acquire and the seller agrees to grant a number of options exercisable or maturing after a reference time; and   transmitting, by the computer system, second outputs wherein the second outputs include at least one bid price or offer price for the standardized form of contract;   wherein at least one of (i) the number of options, (ii) the price(s) of the options, (iii) the strike price, and (iv) one or more terms of the options are being determined, in accordance with the contract specifications, by reference to the level of an underlying at said reference time, the underlying being a specified observable quantity selected from a group consisting of a stock price, a commodity price, a financial asset price, a basket of financial assets price, a financial index value and a financial contract price; and   wherein the contract is available to trade before said reference time.   
     
     
         4 . The computer-implemented method of  claim 3 , wherein the trade order information is submitted by telephone, internet, or a wide area network. 
     
     
         5 . A computer-implemented method for clearing contracts thorough a clearinghouse, the method being performed on a computer system, the method comprising:
 receiving, by the computer system, first inputs corresponding to a standardized form of contract under which the buyer agrees to acquire and the seller agrees to grant a number of options exercisable or maturing after a reference time;   receiving, by the computer system, second inputs corresponding to the identity of a buyer (or their agent) or a seller (or their agent); and   receiving, by the computer system, third inputs corresponding to a price for the standardized form of contract;   wherein at least one of (i) the number of options, (ii) the price(s) of the options, (iii) the strike price, and (iv) one or more terms of the options are being determined, in accordance with the contract specifications, by reference to the level of an underlying at said reference time, the underlying being a specified observable quantity selected from a group consisting of a stock price, a commodity price, a financial asset price, a basket of financial assets price, a financial index value and a financial contract price; and   wherein the contract is available to trade before said reference time.   
     
     
         6 . The computer-implemented method of  claim 5 , wherein the inputs are received by telephone, internet, or a wide area network. 
     
     
         7 . A computer-implemented method for displaying trade order information, reflecting buying and selling interest received by an exchange, a futures exchange, an options exchange, a futures and options exchange, other trading facility, or a clearinghouse, the method being performed on a computer system, the method comprising:
 displaying, by the computer system, first outputs corresponding to a standardized form of contract under which the buyer agrees to acquire and the seller agrees to grant a number of options exercisable or maturing after a reference time; and   displaying, by the computer system, second outputs wherein the second outputs include at least one bid price or offer price for the standardized form of contract;   wherein at least one of (i) the number of options, (ii) the price(s) of the options, (iii) the strike price, and (iv) one or more terms of the options are being determined, in accordance with the contract specifications, by reference to the level of an underlying at said reference time, the underlying being a specified observable quantity selected from a group consisting of a stock price, a commodity price, a financial asset price, a basket of financial assets price, a financial index value and a financial contract price; and   wherein the contract is available to trade before said reference time.   
     
     
         8 . A computer-implemented method for trading, between a buyer and a seller at an exchange, a futures exchange, an options exchange, a futures and options exchange, or other trading facility, the method being performed on a computer system, the method comprising:
 receiving, by the computer system, first inputs from the buyer and seller corresponding to a standardized form of contract under which the buyer is granted the right to acquire and the seller grants the right to acquire a number of options exercisable or maturing after a reference time;   receiving, by the computer system, second inputs from the buyer and the seller wherein the second inputs include at least one bid price and at least one offer price for the standardized form of contract; and   matching, in the computer system, the first inputs and the bid prices and the offer prices and forming a contract based, at least in part, on the matching;   wherein at least one of (i) the number of options, (ii) the price(s) of the options, (iii) the strike price, and (iv) one or more terms of the options are being determined, in accordance with the contract specifications, by reference to the level of an underlying at said reference time, the underlying being a specified observable quantity selected from a group consisting of a stock price, a commodity price, a financial asset price, a basket of financial assets price, a financial index value and a financial contract price; and   wherein the contract is available to trade before said reference time.   
     
     
         9 . The computer-implemented method of  claim 8 , wherein the contract is traded by telephone, internet, or a wide area network. 
     
     
         10 . A computer-implemented method for submitting trade order information to an exchange, a futures exchange, an options exchange, a futures and options exchange, or other trading facility, the method being performed on a computer system, the method comprising:
 transmitting, by the computer system, first outputs corresponding to a standardized form of contract under which the buyer is granted the right to acquire and the seller grants the right to acquire a number of options exercisable or maturing after a reference time; and   transmitting, by the computer system, second outputs wherein the second outputs include at least one bid price or offer price for the standardized form of contract;   wherein at least one of (i) the number of options, (ii) the price(s) of the options, (iii) the strike price, and (iv) one or more terms of the options are being determined, in accordance with the contract specifications, by reference to the level of an underlying at said reference time, the underlying being a specified observable quantity selected from a group consisting of a stock price, a commodity price, a financial asset price, a basket of financial assets price, a financial index value and a financial contract price; and   wherein the contract is available to trade before said reference time.   
     
     
         11 . The computer-implemented method of  claim 10 , wherein the trade order information is submitted by telephone, internet, or a wide area network. 
     
     
         12 . A computer-implemented method for clearing contracts thorough a clearinghouse, the method being performed on a computer system, the method comprising:
 receiving, by the computer system, first inputs corresponding to a standardized form of contract under which the buyer is granted the right to acquire and the seller grants the right to acquire a number of options exercisable or maturing after a reference time;   receiving, by the computer system, second inputs corresponding to the identity of a buyer (or their agent) or a seller (or their agent); and   receiving, by the computer system, third inputs corresponding to a price for the standardized form of contract;   wherein at least one of (i) the number of options, (ii) the price(s) of the options, (iii) the strike price, and (iv) one or more terms of the options are being determined, in accordance with the contract specifications, by reference to the level of an underlying at said reference time, the underlying being a specified observable quantity selected from a group consisting of a stock price, a commodity price, a financial asset price, a basket of financial assets price, a financial index value and a financial contract price; and   wherein the contract is available to trade before said reference time.   
     
     
         13 . The computer-implemented method of  claim 12 , wherein the inputs are received by telephone, internet, or a wide area network. 
     
     
         14 . A computer-implemented method for displaying trade order information, reflecting buying and selling interest received by an exchange, a futures exchange, an options exchange, a futures and options exchange, other trading facility, or a clearinghouse, the method being performed on a computer system, the method comprising:
 displaying, by the computer system, first outputs corresponding to a standardized form of contract under which the buyer is granted the right to acquire and the seller grants the right to acquire a number of options exercisable or maturing after a reference time; and   displaying, by the computer system, second outputs wherein the second outputs include at least one bid price or offer price for the standardized form of contract;   wherein at least one of (i) the number of options, (ii) the price(s) of the options, (iii) the strike price, and (iv) one or more terms of the options are being determined, in accordance with the contract specifications, by reference to the level of an underlying at said reference time, the underlying being a specified observable quantity selected from a group consisting of a stock price, a commodity price, a financial asset price, a basket of financial assets price, a financial index value and a financial contract price; and   wherein the contract is available to trade before said reference time.