Put options received an enthusiastic welcome today from investors as they made their debut on five securities exchanges - including the Chicago Board Options Exchange and the Midwest Stock Exchange.
The two Chicago exchanges, along with the American, Philadelphia and Pacific exchanges, started trading puts in 25 underlying stock issues and officials here reported a "surprisingly good response" to the new instrument.
Given all our fears about how well people would understand puts and whether there would be a market for them, we're very pleased with the way things started," said David Rubin, executive vice president of the Midwest.
The CBOE also reported higher than expected volume of 6,584 lots of puts and 69,174 trades in calls. Exchange officials said they were particularly encouraged by the number of individual investors who traded putts.
"We expected to see the professional traders using puts," CBOE senior vice president Ivers Riley said, "but we were delighted to have so many small investors involved."
A CBOE spokesman said the first put trade was for one option of General Motors October 60 at 1 3/8. It was reportedly placed by an individual investor.
That transaction would give the buyer the right to buy 100 shares of General Motors stock at $60 a share anything before the October expiration date. He paid a premium of $1,375 a share or $137.50 of the option.
The CBOE inaugurated trading in call options in this country in April 1973. It now trades call options on 95 underlying stocks.
The stocks in which it trades put options are Avon Products, Eastment Kodak, General Motors, Honeywell and IBM.