Customizable instruments offer the same benefits as Lookalike instruments, with the addition of customizable expiration date, strike, or futures reference contracts. This flexibility can enable a hedge that more closely aligns with the user’s risk profile and strategy.
Customizing the specifications of the contract may result in a more tailored hedge for the customer, however, it does limit the customized option’s optionality from being fungible with the exchange. Because the contract differs slightly from its nearest exchange-listed counterpart, customizable instruments are not directly fungible with exchange-listed contracts. For certain qualified customers, IFM’s initial and variation margin thresholds can, in some cases, act as financing.