The National Over-The-Counter Index is a capitalization weighted, American style index comprised of the 1 00 largest capitalized corporations whose stocks are traded over-the-counter The exercise settlement value of the XOC is based on the closing prices of the component issues on the last trading day (usually Friday) prior to expiration. This PHLX created index began trading in 1985. t has been shown to have a 96% correlation to the NASDAQ Composite Index. To ensure such a high correlation, the PHLX periodically adjusts the XOC to reflect changes in capitalization and mergers involving the component stocks.

The National Over-The-Counter Index enables investors to hedge an OTC portfolio, an investment advantage which was previously available only for listed securities. Even a well diversified portfolio containing OTC issues is subject to risk due to substantial price volatility in OTC traded equities. The XOC is weighted to reflect the prices of its components in proportion to the market value of each issue. Because there are 30 different industries represented in the index, no one equity or sector can bias or control the volatility.