Dow Index Trading Starts Slowly New Feature Allows Investors To Bet On Direction Of Key Stock Market Barometer

Dow Jones Industrial Average stock-index futures rose in their first day on the Chicago Board of Trade, though early activity was less than anticipated.

Investors and speculators Monday got their first crack at the DJIA in Chicago’s trading pits. The Chicago Board of Trade, the world’s largest commodity market, opened its DJIA futures and options contracts, while the Chicago Board Options Exchange offered options on the index.

The success of the markets, which have been much publicized since Dow Jones & Co. agreed in June to license the 101-year-old index, won’t be determined in a day, exchange officials said. Early results were mixed.

Trading activity “is a little lighter than we expected, but it’s slow all around” in financial markets, said Patrick H. Arbor, CBOT chairman, after visiting the new DJIA futures pit.

Exchange officials had projected trading could top the more than 33,000 contracts traded during the May 3, 1982, opening of the 10-year Treasury note.

Dow Jones futures for December delivery settled at 8,171, up 11 from its opening at 8,160. An estimated 20,000 futures and 4,000 options contracts changed hands in all contract months, the CBOT said. The CBOE said 24,700 Dow Jones contracts traded Monday.

In the underlying market, the DJIA ended the day at 8,100.22, bolstered by optimism that benign inflation will reduce borrowing costs, helping corporate profits.

At the CBOT, floor traders and brokers jammed the futures pit, which was designed to hold 350 members. Another 100 or so crammed into the options pit. Prominent traders from across the exchange, including its benchmark U.S. Treasury bond market and grain pits, traded the DJIA contracts.

“I’ll spend most of my time in the bonds, for now,” said Jeff Purcell, a local trader in the U.S. Treasury bond market, who said he traded DJIA futures early today.

Futures contracts traded generally in small orders, most under 20 contracts, floor brokers said. The spread between where sellers offered contracts and buyers bid generally was two points or “ticks,” about $20 for each contract, brokers said. A large order for about 100 contracts saw the bid-ask spread widen, brokers said.

Great interest has surrounded the contract, though “most are waiting to see how liquid the market becomes,” said Ed Wlezien, desk manager for Prudential Securities Inc. at the CBOT.