Contract Multiplier and Cash Settlement: From Index Points to Money
The contract multiplier is the number that turns index points into money. For Israel's TA-35 index options (MAOF), the Tel Aviv Stock Exchange (TASE) specifies a contract size of the index level times NIS 50, and quotes option prices in shekels per contract. At expiry no shares are delivered: the option is cash-settled on the difference between the expiry index and the strike, times 50. This guide from OptionLab (option-graph.com) converts points to shekels and back, works out a settlement payment, and lists the mistakes that cost money.
The Multiplier: NIS 50 per Index Point
Each TA-35 point is worth NIS 50 for one contract. At expiry, every 10 points of intrinsic value are worth NIS 500 per contract, and 100 points are worth NIS 5,000. The calculators on option-graph.com use the same multiplier.
| Index points | NIS per contract |
|---|---|
| 1 | 50 |
| 10 | 500 |
| 20 | 1,000 |
| 80 | 4,000 |
| 100 | 5,000 |
A common source of confusion is older Israeli websites that state NIS 100 per point. The current TASE specification says NIS 50, and every calculation here and on option-graph.com follows it.
Prices Are Quoted in Shekels per Contract
The price you see for a TA-35 option is already a price per contract in shekels, not a price in points. To find the points, divide by 50: an option at NIS 3,000 is worth 60 points; an option at NIS 750 is worth 15 points. The TASE specification also sets the minimum price change:
| Option price (NIS) | Minimum price change (NIS) |
|---|---|
| Up to 20 | 1 |
| 21 to 100 | 2 |
| 101 to 200 | 5 |
| Above 200 | 10 |
So an option priced at NIS 3,000 moves in steps of NIS 10, or 0.2 points. When you enter a premium in the Options Profit Calculator on option-graph.com, enter it in points and set Shares per Contract to 50.
Cash Settlement: How the Payment Is Calculated
According to TASE, TA-35 options are European and cash-settled, and in-the-money options are exercised automatically. The payment at expiry is:
- Call: (expiry index − strike) × NIS 50, if positive; otherwise zero.
- Put: (strike − expiry index) × NIS 50, if positive; otherwise zero.
- Net result: the payment minus the premium paid (buyer), or the premium received minus the payment (writer).
The expiry index is calculated from the opening prices of the index's stocks, so it is not the live index. On TASE's derivatives calendar, the settlement price for monthly series is fixed on a Friday and settlement is booked on the following Sunday. The expiration line on option-graph.com applies exactly these formulas.
A Worked Example
Suppose, for illustration only, that you buy a 4,200 call for NIS 3,000 (60 points) and a 4,200 put for NIS 2,500 (50 points). The expiry index is fixed at 4,290. The call is 90 points in the money, so it pays 90 × 50 = NIS 4,500, and the net result is +NIS 1,500. The put is out of the money and expires worthless, for −NIS 2,500. The call's breakeven is 4,260; the put's is 4,150. Both legs can be entered on option-graph.com to see each payoff line.
A 4,200 call bought for NIS 3,000, by expiry index
Profit zoneLoss zoneK = StrikeBE = Breakeven
| Point | NIS per contract |
|---|---|
| Strike 4,200 | −3,000 |
| Breakeven 4,260 | 0 |
| P/L at 4,050 | −3,000 |
| P/L at 4,400 | +7,000 |
- Contract size: index points × NIS 50 (TASE specification)
- Premium NIS 3,000 per contract, 60 points
- Cash-settled at expiry; commissions and taxes excluded
Several Contracts: Everything Scales
The multiplier applies per contract, so the result grows in proportion to the number of contracts. Three calls like the one above cost NIS 9,000, and at an expiry index of 4,290 the result is +NIS 4,500. The maximum loss triples too, to NIS 9,000. The breakeven does not move, because it is measured in index points. Changing a leg's quantity on option-graph.com scales the whole chart.
How Other Markets Compare
Multipliers differ between contracts. According to Cboe's specification, S&P 500 index options (SPX) use $100 per point and are cash-settled from the opening prices of the index's stocks on the expiration date. According to FINRA, a standard US stock option covers 100 shares and its premium is quoted per share. Before any calculation, check two things: the multiplier, and whether the price is quoted per unit or per contract. The calculators on option-graph.com keep the two separate.
Common Mistakes
- Reading the price as points: a NIS 3,000 option is 60 points, not 3,000.
- Using an old multiplier: NIS 100 per point doubles every result.
- Using the live index: the payment depends only on the expiry index.
- Forgetting the premium: the settlement payment is not the profit; subtract what you paid.
Risks and Limitations
The multiplier magnifies gains and losses alike: a 100-point move is NIS 5,000 per contract. Writers can lose far more than the premium received and must post collateral. The figures here are illustrative, and contract rules are set by TASE and can change. Options are not suitable for every investor. OptionLab (option-graph.com) is an educational and analytical tool and does not provide investment advice; compute your exact position on option-graph.com before trading.
Summary
- In TA-35 options each index point is worth NIS 50 per contract.
- Prices are quoted in shekels per contract; divide by 50 to get points.
- Settlement is in cash against the expiry index, and in-the-money options are exercised automatically.
- Results scale with the number of contracts; the breakeven does not.
- Convert every quote before you test it on option-graph.com.