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ExchangeBulletin

July 14, 2006 Volume 34, Number 28The Constitution and Rules of the Chicago Board Options Exchange, Incorporated (“Exchange”), in certain specific instances, require the Exchange to provide notice to the Exchange membership. To satisfy this requirement, a complimentary copy of the Exchange Bulletin, including the Regulatory Bulletin, is delivered by hard copy or e-mail to all effective members on a weekly basis. CBOE members are encouraged to receive the Exchange and Regulatory Bulletin and Information Circulars via e-mail. E-mail subscriptions may be obtained by submitting your name, firm if applicable, mailing address, e-mail address, and phone number, to [email protected], or, by contacting the Membership Department by phone, at 312-786-7449. There is no charge for e-mail delivery of the Exchange and Regulatory Bulletin or for Information Circulars. If you do sign up for e-mail delivery, please remem-ber to inform the Membership Department of e-mail address changes.

Additional subscriptions for hard copy delivery after the first complimentary copy may be obtained by submitting your name, firm if any, mailing address, e-mail address and telephone number to: Chicago Board Options Exchange, Accounting Department, 400 South LaSalle, Chicago, Illinois 60605, Attention: Bulletin Subscriptions. The cost of an annual subscription (January 1 through December 31) is $200.00 ($100.00 after July 1), payable in advance. The Exchange reserves the right to limit subscriptions by non-members.

For up-to-date Seat Market Quotes, call 312-786-7456 or refer to CBOE.com and click “Seat Market Information” under the “About CBOE” tab. For access to the CBOE Member Web Site, please also notify the Membership Department by sending an e-mail to [email protected] or by phone at 312-786-7449.

Copyright © 2006 Chicago Board Options Exchange, Incorporated

SEAT MARKET QUOTES AS OF FRIDAY, JULY 14, 2006

CLASS BID OFFER LAST SALE AMOUNT LAST SALE DATE

CBOE $1,280,000.00 $1,375,000.00 $1,305,000.00 June 29, 2006

CBOT FULL MEMBERSHIP

CLASS BID OFFER LAST SALE AMOUNT LAST SALE DATE

With CBOE Exercise Right $2,150,000.00 $2,500,000.00 $2,450,000.00 July 13, 2006

Without CBOE Exercise Right $2,100,000.00 None $1,850,000.00 May 31, 2006

CBOE Exercise Right $115,000.00 $122,000.00 $120,000.00 July 12, 2006

Page � July 14, �006 Volume 34, Number �8 Chicago Board Options Exchange

MEMBERSHIP INFORMATION FOR 07/6/06 THROUGH 07/12/06

MEMBERSHIP APPLICATIONS RECEIVED FORWHICH A POSTING PERIOD IS REQUIRED

Individual Membership Applicants Date Posted

Member Organization Applicants Date PostedBase-2 Markets, LLC 7/10/06Stephen T. O’Connor, CBT Registered For1603 Orrington Ave., Suite 900Evanston, IL 60201 Base-2 Management, LLC – Member Base-2 Capital Group, LLC – Member Michael J. Carusillo – Member Aubrey J. Ellis, Jr. – Member Thomas H. Jevon – Member Stephen T. O’Connor – Member John K. Scholvin - Member

Citadel Trading Group LLC 7/10/06Daniel Leo Dufresne, Nominee131 S. Dearborn, 32nd FloorChicago, IL 60603 Citadel Limited Partnership – Member Manager Citadel Investment Group, LLC – General Partner Kenneth C. Griffith – Member Citadel Wellington, LLC – Member Citadel Limited Partnership – Member Daniel L. Dufresne – CEO Michael G. Felty – CCO Peter A. Jenson - CFO

MEMBERSHIP LEASES

New Leases Effective Date

Lessor: Merrill Lynch, Pierce, 7/7/06 Fenner & Smith, Inc. Lessee: Man Securities Inc. J Todd Weingart, NOMINEERate: 0.375% Term: Monthly MEMBERSHIP TERMINATIONS

Individual MembersCBT Registered For: Termination Date

Michael E. Sorvillo Jr. (MES) 7/7/06Infinium Capital Management, LLC

EFFECTIVE MEMBERSHIPS

Individual MembersCBT Registered For: Effective Date David J. Masino (MSO) 7/10/06Panos Trading Limited PartnershipType of Business to be Conducted: Market Maker

Nominee(s) / Inactive Nominee(s): Matthew P. O’Connell (MOC) 7/10/06Tradelink LLCType of Business to be Conducted: Market Maker

Termination Date

Anthony V. Iacovelli (IAC) 7/12/06Ronin Capital, LLCType of Business to be Conducted: Market Maker

CHANGES IN MEMBERSHIP STATUS

Individual Members Effective Date

Roy Briggs 7/7/06From: Nominee For TD Options, LLC; Market Maker/ Floor BrokerTo: Nominee For TD Options, LLC; Market Maker

Eugene Chae 7/7/06From: Nominee For TD Options, LLC; Market Maker/ Floor BrokerTo: Nominee For TD Options, LLC; Market Maker

Adam Grealish 7/7/06From: Nominee For TD Options, LLC; Market Maker/ Floor BrokerTo: Nominee For TD Options, LLC; Market Maker

Harry Kasprzyk 7/7/06From: Nominee For TD Options, LLC; Market Maker/ Floor BrokerTo: Nominee For TD Options, LLC; Market Maker

James Keaty 7/7/06From: Nominee For TD Options, LLC; Market Maker/ Floor BrokerTo: Nominee For TD Options, LLC; Market Maker

Phillip Kunze 7/7/06From: Nominee For TD Options, LLC; Market Maker/ Floor BrokerTo: Nominee For TD Options, LLC; Market Maker

Joseph Nelkin 7/7/06From: Nominee For TD Options, LLC; Market Maker/ Floor Broker To: Nominee For TD Options, LLC; Market Maker

David Rodriguez 7/7/06From: Nominee For TD Options, LLC; Market Maker/ Floor BrokerTo: Nominee For TD Options, LLC; Market Maker

Steven Rydberg 7/7/06From: Nominee For TD Options, LLC; Market Maker/ Floor BrokerTo: Nominee For TD Options, LLC; Market Maker

Michael Stodden 7/7/06From: Nominee For TD Options, LLC; Market Maker/ Floor BrokerTo: Nominee For TD Options, LLC; Market Maker

Timothy Werner 7/7/06From: Nominee For TD Options, LLC; Market Maker/ Floor BrokerTo: Nominee For TD Options, LLC; Market Maker

Matthew Witt 7/7/06From: Nominee For TD Options, LLC; Market Maker/ Floor BrokerTo: Nominee For TD Options, LLC; Market Maker

July 14, �006 Volume 34, Number �8 Chicago Board Options Exchange

Effective Date Effective Date

Edmund Zarek 7/7/06From: Nominee For TD Options, LLC; Market Maker/ Floor BrokerTo: Nominee For TD Options, LLC; Market Maker

Donald Betten 7/7/06From: Nominee For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: Nominee For Susquehanna Investment Group; Market Maker

Erik Bolinder 7/7/06From: Nominee For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: Nominee For Susquehanna Investment Group; Market Maker

Donald Crowley 7/7/06From: Nominee For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: Nominee For Susquehanna Investment Group; Market Maker

Benjamin Dekker 7/7/06From: Nominee For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: Nominee For Susquehanna Investment Group; Market Maker

Patrick Doherty 7/7/06From: Nominee For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: Nominee For Susquehanna Investment Group; Market Maker

Geoffrey Fahy 7/7/06From: Nominee For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: Nominee For Susquehanna Investment Group; Market Maker James Fitzgibbons 7/7/06From: Nominee For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: Nominee For Susquehanna Investment Group; Market Maker

Daniel Frailey 7/7/06From: Nominee For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: Nominee For Susquehanna Investment Group; Market Maker

Jonathan Garrity 7/7/06From: Nominee For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: Nominee For Susquehanna Investment Group; Market Maker John Karp 7/7/06From: Nominee For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: Nominee For Susquehanna Investment Group; Market Maker

Adam Keslosky 7/7/06From: Nominee For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: Nominee For Susquehanna Investment Group; Market Maker

Christopher Larkin 7/7/06

From: Nominee For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: Nominee For Susquehanna Investment Group; Market Maker

Richard Levine 7/7/06From: Nominee For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: Nominee For Susquehanna Investment Group; Market Maker

Andrew Little 7/7/06From: Nominee For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: Nominee For Susquehanna Investment Group; Market Maker

Bradley McCarty 7/7/06From: Nominee For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: Nominee For Susquehanna Investment Group; Market Maker

David Melam 7/7/06From: Nominee For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: Nominee For Susquehanna Investment Group; Market Maker

Thomas Neil 7/7/06From: Nominee For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: Nominee For Susquehanna Investment Group; Market Maker

Jeffrey Ream 7/7/06From: Nominee For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: Nominee For Susquehanna Investment Group; Market Maker

Brian Saldeen 7/7/06From: Nominee For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: Nominee For Susquehanna Investment Group; Market Maker James Sieck 7/7/06From: Nominee For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: Nominee For Susquehanna Investment Group; Market Maker

Max Sung 7/7/06From: Nominee For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: Nominee For Susquehanna Investment Group; Market Maker

Charles F. Thompson 7/7/06From: Nominee For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: Nominee For Susquehanna Investment Group; Market Maker

Nathanael Wickman 7/7/06From: Nominee For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: Nominee For Susquehanna Investment Group; Market Maker

July 14, �006 Volume 34, Number �8 Chicago Board Options Exchange

Effective Date

Michael N. Block 7/7/06From: Nominee For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: Nominee For Susquehanna Investment Group; Market Maker

Spencer Worley 7/7/06From: Nominee For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: Nominee For Susquehanna Investment Group;

Eli Shearn 7/7/06From: Nominee For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: Nominee For Susquehanna Investment Group; Market Maker

Naim Abdullah 7/7/06From: CBT Registered For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: CBT Registered For Susquehanna Investment Group; Market Maker

Akiva Balfour 7/7/06From: CBT Registered For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: CBT Registered For Susquehanna Investment Group; Market Maker

Michael J. Claerhout 7/7/06From: CBT Registered For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: CBT Registered For Susquehanna Investment Group; Market Maker

Ethan Coombs 7/7/06From: CBT Registered For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: CBT Registered For Susquehanna Investment Group; Market Maker

Sean Crozier 7/7/06From: CBT Registered For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: CBT Registered For Susquehanna Investment Group; Market Maker

Lisa Doris 7/7/06From: CBT Registered For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: CBT Registered For Susquehanna Investment Group; Market Maker

Scotland Ernsting 7/7/06From: CBT Registered For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: CBT Registered For Susquehanna Investment Group; Market Maker

Thomas Genereaux 7/7/06From: CBT Registered For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: CBT Registered For Susquehanna Investment Group; Market Maker

Jacklyn Godic 7/7/06From: CBT Registered For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: CBT Registered For Susquehanna Investment Group; Market Maker

Effective Date

Sean Haggerty 7/7/06From: CBT Registered For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: CBT Registered For Susquehanna Investment Group; Market Maker

Andrew Hodgman 7/7/06From: CBT Registered For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: CBT Registered For Susquehanna Investment Group; Market Maker

Jason Hyland 7/7/06From: CBT Registered For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: CBT Registered For Susquehanna Investment Group; Market Maker

Paul Jiganti 7/7/06From: CBT Registered For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: CBT Registered For Susquehanna Investment Group; Market Maker

William Johnston 7/7/06From: CBT Registered For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: CBT Registered For Susquehanna Investment Group; Market Maker

Michael Kmec 7/7/06From: CBT Registered For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: CBT Registered For Susquehanna Investment Group; Market Maker

Scott Lewis 7/7/06From: CBT Registered For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: CBT Registered For Susquehanna Investment Group; Market Maker

Daniel L’Italien 7/7/06From: CBT Registered For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: CBT Registered For Susquehanna Investment Group; Market Maker

Mark Malueg 7/7/06From: CBT Registered For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: CBT Registered For Susquehanna Investment Group; Market Maker

Scott Rives 7/7/06From: CBT Registered For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: CBT Registered For Susquehanna Investment Group; Market Maker

Steven Romanchuk 7/7/06From: CBT Registered For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: CBT Registered For Susquehanna Investment Group; Market Maker

James Schiavetti 7/7/06From: CBT Registered For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: CBT Registered For Susquehanna Investment Group; Market Maker

Page � July 14, �006 Volume 34, Number �8 Chicago Board Options Exchange Effective Date

Benjamin Schneider 7/7/06From: CBT Registered For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: CBT Registered For Susquehanna Investment Group; Market Maker

Chad Steinglass 7/7/06From: CBT Registered For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: CBT Registered For Susquehanna Investment Group; Market Maker

Frank Tenerelli 7/7/06From: CBT Registered For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: CBT Registered For Susquehanna Investment Group; Market Maker

Patrick Wagoner 7/7/06From: CBT Registered For Susquehanna Investment Group; Market Maker/ Floor BrokerTo: CBT Registered For Susquehanna Investment Group; Market Maker Wade A. Fowler 7/10/06From: Nominee For Equitec Structured Products, LLC; Market Maker/ Floor BrokerTo: Nominee For Equitec Structured Products, LLC; Market Maker

Christopher T. Weiler 7/10/06From: Nominee For Equitec Structured Products, LLC; Market Maker/ Floor BrokerTo: Nominee For Equitec Structured Products, LLC; Market Maker

Anthony M. Ring 7/10/06From: Nominee For Equitec-Brown, LLC; Market Maker/ Floor BrokerTo: Nominee For Equitec-Brown, LLC; Market Maker

Jason A. Stamer 7/10/06From: Nominee For Equitec-Brown, LLC; Market Maker/ Floor BrokerTo: Nominee For Equitec-Brown, LLC; Market Maker

Marc A. Brown 7/10/06From: Nominee For Equitec-Brown, LLC; Market Maker/ Floor BrokerTo: Nominee For Equitec-Brown, LLC; Market Maker

Timothy E. Starsia 7/10/06From: Nominee For Equitec RS, LLC; Market Maker/ Floor BrokerTo: Nominee For Equitec RS, LLC; Market Maker

Lincoln W. Brewer 7/10/06From: Nominee For Equitec RS, LLC; Market Maker/ Floor BrokerTo: Nominee For Equitec RS, LLC; Market Maker

Guy E. Caprio 7/10/06From: Nominee For Equitec RS, LLC; Market Maker/ Floor BrokerTo: Nominee For Equitec RS, LLC; Market Maker Neal A. Jaffe 7/10/06From: Nominee For Equitec-Furman LLC; Market Maker/ Floor BrokerTo: Nominee For Equitec-Furman LLC; Market Maker

Effective Date

William Ulivieri 7/10/06From: Nominee For Equitec-Furman LLC; Market Maker/ Floor BrokerTo: Nominee For Equitec-Furman LLC; Market Maker

James J. Carroll 7/10/06From: Nominee For Equitec Premier, LLC; Market Maker/ Floor BrokerTo: Nominee For Equitec Premier, LLC; Market Maker

Peter Walsh 7/10/06From: Nominee For Equitec Premier, LLC; Market Maker/ Floor BrokerTo: Nominee For Equitec Premier, LLC; Market Maker

Kenneth D. Mueller 7/10/06From: Nominee For Equitec-Schwartz, LLC; Market Maker/ Floor BrokerTo: Nominee For Equitec-Schwartz, LLC; Market Maker

Ethan Schwartz 7/10/06From: Nominee For Equitec-Schwartz, LLC; Market Maker/ Floor BrokerTo: Nominee For Equitec-Schwartz, LLC; Market Maker

Barton Bergman 7/12/06From: Nominee For Timber Hill, LLC; Market Maker/ Floor BrokerTo: Nominee For Timber Hill, LLC; Market Maker

David Drummond 7/12/06From: Nominee For Timber Hill, LLC; Market Maker/ Floor BrokerTo: Nominee For Timber Hill, LLC; Market Maker

Patrick Caffrey 7/12/06From: Nominee For Timber Hill, LLC; Market Maker/ Floor BrokerTo: Nominee For Timber Hill, LLC; Market Maker

Christine Lopau 7/12/06From: Nominee For Timber Hill, LLC; Market Maker/ Floor Broker To: Nominee For Timber Hill, LLC; Market Maker

Christopher Cribari 7/12/06From: Nominee For Timber Hill, LLC; Market Maker/ Floor BrokerTo: Nominee For Timber Hill, LLC; Market Maker

Steven D. Menneke 7/12/06From: Nominee For Timber Hill, LLC; Market Maker/ Floor BrokerTo: Nominee For Timber Hill, LLC; Market Maker

Benjamin Rauch 7/12/06From: Nominee For Timber Hill, LLC; Market Maker/ Floor BrokerTo: Nominee For Timber Hill, LLC; Market Maker

John J. Brucato 7/12/06From: Nominee For Timber Hill, LLC; Market Maker/ Floor BrokerTo: Nominee For Timber Hill, LLC; Market Maker

David Flemming 7/12/06From: CBT Registered For Timber Hill, LLC; Market Maker/ Floor BrokerTo: CBT Registered For Timber Hill, LLC; Market Maker

July 14, �006 Volume 34, Number �8 Chicago Board Options Exchange Effective Date

Elizabeth Dierking 7/12/06From: CBT Registered For Timber Hill, LLC; Market Maker/ Floor BrokerTo: CBT Registered For Timber Hill, LLC; Market Maker

Brian Brantner 7/12/06From: CBT Registered For Timber Hill, LLC; Market Maker/ Floor BrokerTo: CBT Registered For Timber Hill, LLC; Market Maker

John Colletti 7/12/06From: Nominee For Samuelson Trading Corporation; Market Maker/ Floor BrokerTo: Nominee For Samuelson Trading Corporation; Market Maker

James Piko 7/12/06From: Nominee For Samuelson Trading Corporation; Market Maker/ Floor BrokerTo: Nominee For Samuelson Trading Corporation; Market Maker

Scott Samuelson 7/12/06From: Nominee For Samuelson Trading Corporation; Market Maker/ Floor BrokerTo: Nominee For Samuelson Trading Corporation; Market Maker

Ronald Dawczak 7/12/06From: Nominee For Samuelson/Smith; Market Maker/ Floor BrokerTo: Nominee For Samuelson/Smith; Market Maker

Effective Date

Ronald Dawczak 7/12/06From: Nominee For Samuelson/Smith; Market Maker/ Floor BrokerTo: Nominee For Samuelson/Smith; Market Maker

Member Organizations Effective Date

Samuelson/Smith 7/12/06From: Lessee; Associated with a Market Maker/ Floor BrokerTo: Lessee; Associated with a Market Maker

Equitec-Brown, LLC 7/10/06From: Lessee; Associated with a Market Maker/ Floor BrokerTo: Lessee; Associated with a Market Maker

Equitec RS, LLC 7/10/06From: Lessee/ Member Organization Affiliated with a CBT Registered For; Associated with a Market Maker/ Floor BrokerTo: Lessee/ Member Organization Affiliated with a CBT Registered For; Associated with a Market Maker

Equitec-Furman, LLC 7/10/06From: Owner; Associated with a Market Maker/ Floor BrokerTo: Owner; Associated with a Market Maker

Equitec Premier, LLC 7/10/06From: Owner; Associated with a Market Maker/ Floor BrokerTo: Owner; Associated with a Market Maker

Equitec-Schwartz, LLC 7/10/06From: Owner/ Lessee; Associated with a Market Maker/ Floor BrokerTo: Owner/ Lessee; Associated with a Market Maker

Page � July 14, �006 Volume 34, Number �8 Chicago Board Options Exchange

POSITION LIMIT CIRCULARSPursuant to Exchange Rule 4.11, the Exchange issued the below listed Position Limit Circulars on July 13, 2006. The complete circulars are available from the Department of Market Regulation, in the data information bins on the 2nd Floor of the Exchange, and on the CBOE website at cboe.com under the “Market Data” tab.

To receive regular updates of the position limit list via fax, contact Candice Nickrand at (312) 786-7730. Questions concerning position and exer-cise limits may be directed to the Department of Market Regulation to Dan Earner at (312) 786-7059 or Tim Mac Donald at (312) 786-7706.

RESEARCH CIRCULARS The following Research Circulars were distributed between June 30 and July 13, 2006. If you wish to read the entire document, please refer to the CBOE website at www.cboe.com and click on the “Trading Tools” Tab. New listings and series information is also available in the Trading Tools section of the website. For questions regarding information discussed in a Research Circular, please call The Options Clearing Corporation at 1-888-OPTIONS.

POSITION LIMIT CIRCULAR PL06-39July 13, 2006KCS Energy, Inc. (“KCS/OKN/WBR”) merger completed with Petrohawk Energy Corporation (“HAWK/PQM”)Effective Date July 13, 2006

Research Circular #RS06-552June 30, 2006Semiconductor HOLDRs Trust (“SMH/YRH/OTO”) Cash Distribu-tionEx-Distribution Date: July 6, 2006

Research Circular #RS06-553July 3, 2006Wireless HOLDRs Trust (“WMH”) Cash DistributionEx-Distribution Date: July 5, 2006*** CORRECTION TO STRIKE PRICES ***

Research Circular #RS06-554July 3, 2006PanAmSat Holding Corporation (“PA”) MergerCOMPLETED with Intelsat, Ltd.

Research Circular #RS06-555July 5, 2006Knight-Ridder, Inc. (“KRI/adj. KKJ/LZH/ZGF”)Determination of Cash-in-Lieu Amount

Research Circular #RS06-557July 5, 2006*****UPDATE*****UPDATE*****UPDATE*****Semiconductor HOLDRs Trust (“SMH/YRH/OTO”) Cash Distribu-tionEx-Distribution Date: July 6, 2006

Research Circular #RS06-558July 6, 2006Alltel Corporation (“AT/WJH/VTB & adj. VWZ/YXC”)Distribution of Shares ofWindstream Corporation (“WIN”)Ex-Distribution Date: July 18, 2006

Research Circular #RS06-559July 6, 2006UBS AG (“UBS/ODX/YUD”) 2-for-1 Stock SplitEx-Distribution Date: July 10, 2006

Research Circular #RS06-600July 6, 2006Helmerich & Payne, Inc. (“HP”) 2-for-1 Stock SplitEx-Distribution Date: July 10, 2006 Research Circular #RS06-615July 13, 2006ECI Telecom Ltd. (“ECIL/ECQ & adj. ECE”)Determination of Exact Distribution Ratio and Cash-in-Lieu Amount

July 19, 2006 Volume RB17, Number 28 1

___________________________________________________________________________________

The Constitution and Rules of the Chicago Board Options Exchange, Incorporated (“Exchange”), in certain specific instances, require the Exchange to provide notice to the membership. The weekly Regulatory Bulletin is delivered to all effective members to satisfy this requirement. Copyright © 2006 Chicago Board Options Exchange, Incorporated. ___________________________________________________________________________________

REGULATORY CIRCULARS Regulatory Circular RG06-68 Date: July 3, 2006 To: The Membership From: Financial Planning Committee Subject: Fee Reductions for July 2006 CBOE has averaged approximately 2.7 million contracts per day (CPD) on a year-to-date basis. Per the 2006 Prospective Fee Reduction Program, Market-Maker and DPM transaction fees and floor brokerage fees will be reduced by 20% per contract from standard rates during July 2006. June 2006 discounts were also 20%. Standard July ‘06 Fee Rate Rate__ Equities Market-Maker Trans. Fee 22 cents 17.6 cents Equities DPM Trans. Fee 14 cents 11.2 cents QQQQ, SPY, DIA, DJX & Indexes Mrkt.-Maker/DPM Trans. Fee 24 cents (1) 19.2 cents (1) Mini-SPX (XSP) Market-Maker Trans. Fee 15 cents 12.0 cents Floor Brokerage Fee – SPX, OEX & DXL 4 cents 3.2 cents

July 19, 2006 Volume RB17, Number 28


(1) Above rates exclude a 10 cents license fee surcharge for the following products:

• Mini Nasdaq 100 (MNX) • Nasdaq 100 (NDX) • Russell 2000 cash-settled index (RUT) • Dow Jones indexes, excluding DJX and DIA

Please call Ermer Love (312-786-7032) if you have any questions.

Regulatory Circular RG06-70

INTER-EXCHANGE PROCEDURES IN VOLATILE MARKETS FOR THIRD QUARTER 2006

When the NYA advances (or declines) 150 points from the previous day's close: Index arbitrage orders for S&P 500® component stocks must be entered with buy-minus (or sell-plus) instruction until the advance or decline returns to within 70 points from previous day's close.

1100 DJIA POINTS (10%) BELOW PREVIOUS DAY'S

CLOSING VALUE

Trading halts: Trading in all stocks halts for the following time periods when the DJIA reaches this value at the following times:

Before 1:00 p.m.: for one hour;From 1:00 p.m. but before 1:30 p.m.: for 30 minutes;From and after 1:30 p.m.: no mandated trading halt

Limit comes into effect: On CBOT open-ing (7:20 a.m.).

Trading halt: If the futures contract is limit offered during an NYSE trading halt, futures trading will halt until NYSE ends its trading halt and 50% of the underly-ing stocks (capitalization weighted) have resumed trading.

Limit no longer in effect: After futures trading has resumed following an NYSE trading halt or at 1:30 p.m.

1100 POINTS (10%) BELOW PREVIOUS DAY'S

SETTLEMENTBecause CME or CBOT limit is reached: None required; discretionary actions include trading halts and suspensions (with the exercise restrictions described above).

Because NYSE declares floor-wide circuit breaker halt: Trading in all CBOE securities halted during NYSE circuit breaker halt (with the exercise restrictions described above).

None required because of CME or CBOT limit or NYSE actions; discretionary actions include trading halts and suspensions.

Except on the last business day before their expiration, CBOE normally will restrict exercise of American style, cash settled index options during any trading halt that occurs prior to 3:00 p.m. CBOE may restrict exercise in equity options (other than during the 10 business days before their expiration), but it normally will not do so because of trading halts.

None required.

Regulatory Circular RG06-70(supersedes Regulatory Circular RG06-35)

INTER-EXCHANGE PROCEDURES IN VOLATILE MARKETS FOR THIRD QUARTER 2006

As of July 1, 2006

(OVER)

60 POINTS (5%) BELOW PREVIOUS DAY’S SETTLEMENT

Limit comes into effect: On CME opening (8:30 a.m.)

Trading halt: For 2 minutes if the offer is at limit 10 minutes after limit is reached or at 2:30 p.m. Limit no longer in effect: After the 2 minute halt or, if no halt, 10 minutes after the limit is reached or otherwise at 2:30 p.m.

120 POINTS (10%) BELOW PREVIOUS DAY’S SETTLEMENT

Under Normal Limits

Limit comes into effect: After the 60 point (5%) limit or at 2:30 p.m.

Trading halts: Trading will halt for the fol-lowing time periods if the futures contract is limit offered under the following circumstances:

During an NYSE trading halt: Until NYSE ends its trading halt and 50% of the underlying stocks (capitalization weighted) have resumed trading.

After 1:30 p.m., if no NYSE trading halt is declared: For 2 minutes if the contract is limit offered 10 minutes after the limit is reached.

Limit no longer in effect: After a mandated futures trading halt.

******

Under Second Day Limits (those appli-cable on a day after the futures contract was limit offered at the 240 point (20%) level at the close of trading).

Limit comes into effect: After the 60 point (5%) limit, unless there is an NYSE trading halt, in which case only the 20% limit applies upon reopening.

Trading halts:

During an NYSE trading halt (regardless whether the futures con-tract is limit offered): Until NYSE ends its trading halt and 50% of the underlying stocks (capitalization weighted) have resumed trading.

If no NYSE trading halt is declared: For 2 minutes if the contract is limit offered 10 minutes after the limit is reached or at 2:30 p.m.

Limit no longer in effect: After a mandated futures trading halt or, if no halt, 10 minutes after the limit is reached or otherwise at 2:30 p.m.

CME (S&P 500® FUTURES) NYSE ACTION CBOT (DJIASM FUTURES) CBOE ACTION

Discretionary actions include trading halts in individual stocks.

This information has been compiled by CBOE for general information purposes only, and therefore should not be considered complete or precise. Most matters discussed are subject to detailed exchange rules and to the discretion of exchange officials. The rules of the various exchanges are subject to change and may not be reflected in this information. CBOE assumes no responsibility for any errors or omissions in the information presented. In addition, this circular does not address specialized circumstances, such as the times that would be applicable on days when one or more underlying equity markets is scheduled to close trading earlier than normal or the rules applicable to Chapter 30 securities. These specialized matters are covered in detail by exchange rules. All times listed are Central times. “S&P” and “S&P 500” are trademarks of Mc-Graw Hill, Inc., and "DJIA" is a service mark of Dow Jones & Company, Inc., and neither company assumes any liability in connection with the trading of any contract based on its indexes.

(Date of issuance: July 13, 2006)

CME (S&P 500 FUTURES) NYSE ACTION CBOT (DJIA FUTURES) CBOE ACTION

Regulatory Circular RG06-70As of 07/01/06

Under Normal Limits

Limit comes into effect: After the 120 point (10%) limit.

Trading halts: For 2 minutes if the contract is at limit 10 minutes after limit is reached.

Limit no longer in effect: After any such 2 minute halt.

******

Under Second Day Limits

Limit comes into effect: After the 120 point (10%) limit, unless there is an NYSE trading halt, in which case only the 20% limit applies upon reopening.

Trading halts:

During an NYSE trading halt (regardless whether the futures contract is limit offered): Until NYSE ends its trading halt and 50% of the underlying stocks (capitalization weighted) have resumed trading.

If no NYSE trading halt is declared: For 2 minutes if the contract is limit offered 10 minutes after the limit is reached or at 2:30 p.m.

Limit no longer in effect: After a man-dated futures trading halt or, if no halt, 10 minutes after the limit is reached or otherwise at 2:30 p.m.

For more information, call 1-888-OPTIONS or visit our Web site at www.cboe.com


CLOSING VALUE

Trading halts and does not reopen for the day.

The 240 point (20%) limit remains in effect.

Settlement value will not be less than the limit value, regardless of the value of the cash index.

Limit comes into effect: After the 2200 point (20%) limit.

Limit remains in effect for the remainder of the trading day.

Trading halt: Trading shall halt for the rest of the day if the futures contract is limit offered at any time during the trading day and the NYSE declares a trading halt for the rest of the trading day.


SETTLEMENT

If NYSE declares floor wide trading halt for the remainder of the day: CBOE halts trading for the remainder of the day (with the exercise restrictions described above).

Because CBOT limit is reached: None required; discretionary actions include trading halts and suspensions (with the exercise restrictions described above).


CLOSING VALUE

Trading halts: Trading in all stocks halts for the following time periods when the DJIA reaches this value at the following times:

Before 12:00 p.m.: for two hoursFrom 12:00 p.m. but before 1:00 p.m.: for one hourFrom and after 1:00 p.m.: for the remainder of the day

Limit comes into effect: After the 1100 point (10%) limit or at 1:30 p.m.

Trading halt: If the futures contract is limit offered during an NYSE trading halt, futures trading will halt until NYSE ends its trading halt and 50% of the underly-ing stocks (capitalization weighted) have resumed trading.

Limit no longer in effect: After futures trading has resumed following an NYSE trading halt.

Because CME or CBOT limit is reached: None required; discretionary actions include trading halts and suspen-sions (with the exercise restrictions described above).

Because NYSE declares a floor wide circuit breaker halt: Trading in all CBOE securities halted during NYSE circuit breaker halt (with the exercise restrictions described above).


SETTLEMENT

INTER-EXCHANGE PROCEDURES IN VOLATILE MARKETS(continued)


CLOSING VALUE

Limit comes into effect: After the 180point (15%) limit or, when Second Day Limits are in effect, at 2:30 p.m. or after trading resumes following an NYSE trading halt.

Limit remains in effect for the remainder of the trading day.

Trading halt:

(Normal Limits): If the futures contract is limit offered during an NYSE trading halt.

(Second Day Limits): If there is an NYSE trading halt, regardless whether the futures contract is limit offered.

Trading will resume when NYSE ends its trading halt and 50% of the underly-ing stocks (capitalization weighted) have resumed trading.

Settlement value will not be less than the limit value, regardless of the value of the cash index.

240 POINTS (20%) BELOWPREVIOUS DAY'S

SETTLEMENT

None required; discretionary actions in-clude trading halts in individual stocks.

None required; discretionary actions include trading halts and suspensions (with the exercise restrictions described above).


Regulatory Circular RG06-071 To: Membership From: Legal Division Regulatory Services Division Trading Operations

Date: July 13, 2006

Re: Preferred Market-Maker Program

The Exchange has extended its Preferred Market-Maker Program for directed orders on a pilot basis until June 2, 2007. Under this program, an order flow provider may designate any Exchange Market-Maker type (including DPMs, e-DPMs, Market-Makers, Remote Market-Makers, Lead Market-Makers etc.) in designated Hybrid classes as the “Preferred Market-Maker” for orders sent to the Exchange (use of the Preferred designation is optional).1

Members that are interested in receiving directed orders as a Preferred Market-Maker must register with the Exchange by completing the attached form (also located in the Membership section of www.cboe.org). This form must also be completed by Member Firms to authorize nominees/individual acronyms to participate in the program and receive orders directed to the Firms’ group acronym. Completed forms may be submitted to the 4th Floor Help Desk. Member Organizations must provide written notice to the Exchange’s Help Desk to revoke this authorization. The authorization should always be revoked when an authorized nominee terminates from a Member Organization. Notification provided via email should be directed to [email protected]. The Help Desk will remove terminated employees when it otherwise becomes aware of such terminations. In all cases, Member Organizations are responsible for ensuring that the Exchange is provided accurate information with respect to acronyms used for the receipt of directed orders. The Exchange is not responsible for allocations provided to an authorized Member that has terminated from a Member Organization. To reactivate a Member that has been removed from the program due to termination or inactivation, an officer of the Member Organization may either send an email to the Help Desk ([email protected]) requesting the re-authorization or submit a new application form (attached) with an original signature. However, Member Organizations are required to submit the attached form (with an original signature) to authorize new Members or Members who have not previously been authorized by the Member Organization.

Questions regarding this circular can be directed to Steve Slawinski, Regulatory Services Division at (312) 786-7744 or Kerry Winters, Help Desk at (312) 786-7312.

* * *

1 See Information Circular IC05-122 for technical information regarding transmission of Preferred orders.


AUTHORIZATION FOR PREFERRED MARKET-MAKER DESIGNATION

(Completed form (with original signature) must be submitted to the 4th Floor Help Desk for processing.)

Please enable the following Individual Member(s) to receive orders designating a Preferred Market-Maker: Name: Acronym: ________ Name: Acronym: ________ Name: Acronym: ________ Name: Acronym: ________ Name: Acronym: ________ The Sole Proprietor Member or Member Firm has procedures in place to ensure that the Member will meet the eligibility requirements in Rule 8.13(b) while enabled to receive an order specifying a Preferred Market-Maker. Absent reasonable justification, a Market-Maker (including any Exchange Market-Maker type) who fails to meet the eligibility requirements will be subject to disciplinary action. The Member Firm may also be subject to disciplinary action if the CBOE finds a pattern or practice of activity in violation of the eligibility requirements set forth in Rule 8.13(b). If the Sole Proprietor Member or Member Firm wishes to revoke this authorization for a Market-Maker to receive orders specifying a Preferred Market-Maker, written notice must be provided via e-mail to the CBOE Help Desk at [email protected].

Please note that Sole Proprietor Members or Member Firms may be acting in violation of CBOE Rule 4.1 and Rule 4.18 if they participate in inappropriate conversations prior to the submission and/or receipt of an order specifying a Preferred Market-Maker. Member Firm Name (if applicable):

Market-Maker DPM RMM e-DPM Authorized Signatory Name: (Authorized Officer/General Partner/LLC Manager Signatory of Member Organization (if applicable)) Signature: Title: Date: Contact Name: Contact Phone Number: Contact E-mail Address: June 2006

Membership Department 400 S. LaSalle St. Chicago, IL 60605 312-786-7449 – Phone 312-786-8140 – Fax www.cboe.org


RULE CHANGES EFFECTIVE-ON-FILING RULE CHANGE(S) The following rule filing(s) were submitted to the SEC “effective-on-filing,” and may have taken effect pursuant to Section 19(b)(3) of the Securities Exchange Act. They will remain in effect barring further action by the SEC within 60 days after their publication in the Federal Register. Copies are available on the CBOE public website at www.cboe.com/legal/effectivefiling.aspx. ___________________________________________________________________________________ SR-CBOE-2006-66 Market-Makers Appointments On July 11, 2006, the Exchange filed Rule Change File No. SR-CBOE-2006-66, which filing proposes to amend CBOE Rule 8.3 relating to Market-Maker appointments. Any questions regarding the rule change may be directed to Patrick Sexton, Legal Division, at 312-786-7467. Additions are underlined. Deletions are [bracketed and stricken]. Rule 8.3 – Appointment of Market-Makers Rule 8.3. This Rule governs the appointment of Market-Makers other than Remote Market-Makers. Rule 8.4 governs the appointment of Remote Market-Makers.

(a)(i) On a form or forms prescribed by the Exchange, a registered Market-Maker may apply for an Appointment (having the obligations of Rule 8.7(b) or Rule 30.40, as appropriate) in one or more classes of option contracts or in securities traded subject to the rules in Chapter XXX. From among those Market-Makers registered, the [appropriate Market Performance Committee] Exchange shall ordinarily make two or more Appointments for each class of option contracts or other securities. In making such Appointments, the [Committee]Exchange shall give attention to (a) the preference of registrants; (b) the maintenance and enhancement of competition among Market-Makers in each class of contracts; (c) assuring that financial resources available to a Market-Maker enable him to satisfy the obligations set forth in Rule 8.7 or Rule 30.40 with respect to each class of option contracts to which he is appointed; and (d) the impact additional Market-Makers will have on Exchange systems capacity. Limitations on appointments due to Exchange systems capacity shall be in accordance with Interpretations and Policies .01 to Rule 8.3A. The [appropriate Market Performance Committee]Exchange may arrange two or more classes of contracts into groupings based on, among other things, similar trading locations on the floor, and may make Appointments to those groupings rather than to individual classes. The [appropriate Market Performance Committee]Exchange may suspend or terminate any Appointment of a Market-Maker under this rule and may make additional Appointments whenever, in the [Committee's]Exchange’s judgment, the interests of a fair and orderly market are best served by such action. (ii) In the event a Market-Maker is a nominee of a member organization or has registered the Market-Maker’s membership for a member organization, the member organization with which the Market-Maker is associated can request that the Exchange deem all class appointments be made to the member organization instead of to the individual Market-Maker. If such a request is made, the individual Market-Maker will continue to have all of the obligations of a Market-Maker under Exchange rules, except that the submission of electronic quotations and orders will be made by and on behalf of the member organization with which the individual Market-Maker is associated. (b) No change. (c) Absent an exemption from the [appropriate Market Performance Committee]Exchange, an appointment of a Market-Maker confers the right to quote as below:


(i) – (iii) No change. (d) A member or prospective member adversely affected by a determination made by the Exchange [appropriate Market Performance Committee] under this Rule, including the denial of an appointment in a particular class, may obtain a review thereof in accordance with the provisions of Chapter XIX. ___________________________________________________________________________________ SR-CBOE-2006-65 Quarterly Option Series Pilot Program On July 7, 2006, the Exchange filed Rule Change File No. SR-CBOE-2006-65, which filing proposes to amend its rules in order to list option series that expire at the close of business on the last business day of a calendar quarter (“Quarterly Options Series”). This rule change is being proposed as a one one-year pilot program. Any questions regarding the rule change may be directed to Angelo Evangelou, Legal Division, at 312-786-7464. Additions are underlined. Deletions are [bracketed and stricken].

Definitions Rule 1.1 - When used in these Rules, unless the context otherwise requires: (a) Any term defined in Article I of the constitution and not otherwise defined in this Chapter shall have the meaning assigned to such term in such Article I. (b) – (bbb) No Change. Quarterly Options Series (ccc) Quarterly Option Series. A Quarterly Option Series is a series in an options class that is approved for listing and trading on the Exchange in which the series is opened for trading on any business day and that expires at the close of business on the last business day of a calendar quarter. …Interpretations and Policies: .01-.05 No Change.

* * * * * Rule 5.5 - Option Contracts Open for Trading

(a) After a particular class of options (call option contracts or put option contracts relating to a specific underlying security or calculated index) has been approved for listing and trading on the Exchange, the Exchange from time to time may open for trading series of options on that class. Only options contracts of series currently open for trading may be purchased or written on the Exchange. Prior to the opening of trading in a given series, the Exchange will fix the expiration month, year and exercise price of that series. For Short Term Option Series, the Exchange will fix a specific expiration date and exercise price, as provided in paragraph (d). For Quarterly Options Series the Exchange will fix a specific expiration date and exercise price, as provided in paragraph (e).

(b) Except for Short Term Option series and Quarterly Options Series, at the commencement of trading on the Exchange of a particular class of options, the Exchange usually will open three series of options for each expiration month in that class. The exercise price of each series will be fixed at a price per share, with at least one strike price above and one strike price below the price at which the underlying


stock is traded in the primary market at about the time that class of options is first opened for trading on the Exchange. Paragraph (d) will govern the procedures for opening Short Term Options Series. Paragraph (e) will govern the procedures for opening Quarterly Options Series. (c)-(d) No Change. (e) Quarterly Option Series Pilot Program. For a one-year pilot period, the Exchange may list and trade options series that expire at the close of business on the last business day of a calendar quarter (“Quarterly Options Series”). The Exchange may list Quarterly Options Series for up to five (5) currently listed options classes that are either index options or options on exchange traded funds. In addition, the Exchange may also list Quarterly Options Series on any options classes that are selected by other securities exchanges that employ a similar pilot program under their respective rules. The one-year pilot will commence either the day the Exchange first initiates trading in a Quarterly Options Series or July 24, 2006, whichever is earlier.

(1) The Exchange may list series that expire at the end of the next consecutive four (4) calendar quarters, as well as the fourth quarter of the next calendar year. For example, if the Exchange is trading Quarterly Options Series in the month of May 2006, it may list series that expire at the end of the second, third, and fourth quarters of 2006, as well as the first and fourth quarters of 2007. Following the second quarter 2006 expiration, the Exchange could add series that expire at the end of the second quarter of 2007.

(2) Quarterly Options Series will be P.M. settled.

(3) The strike price for each Quarterly Options Series will be fixed at a price per share, with at

least two strike prices above and two strike prices below the approximate value of the underlying security at about the time that a Quarterly Options Series is opened for trading on the Exchange. The Exchange shall list strike prices for a Quarterly Options Series that are within $5 from the closing price of the underlying on the preceding day. Additional Quarterly Options Series of the same class may be open for trading on the Exchange when the Exchange deems it necessary to maintain an orderly market, to meet customer demand or when the market price of the underlying security moves substantially from the initial exercise price or prices. To the extent that any additional strike prices are listed by the Exchange, such additional strike prices shall be within $5 from the closing price of the underlying on the preceding day. The opening of the new Quarterly Options Series shall not affect the series of options of the same class previously opened.

(4) The interval between strike prices on Quarterly Options Series shall be the same as the

interval for strike prices for series in that same options class that expire in accordance with the normal monthly expiration cycle.

.. . . Interpretations and Policies:

.01 - .02 No Change.

.03 Except for Short Term Option Series and Quarterly Options Series, the Exchange usually will open four expiration months for each class of options open for trading on the Exchange: the first two being the two nearest months, regardless of the quarterly cycle on which that class trades; the third and fourth being the next two nearest term months (May and June) and the next two expiration months of the cycle (July and October). When the May series expires, the Exchange would add January series. When the June series expires, the Exchange would add August series as the next nearest month, and would not add April).

Regarding Short Term Option Series, the Exchange may select up to five currently listed option classes on which Short Term Option Series may be opened on any Short Term Option Opening Date. In addition to the five-option class restriction, the Exchange also may list Short Term Option Series on any option classes that are selected by other securities exchanges that employ a similar Pilot Program


under their respective rules. For each option class eligible for participation in the Short Term Option Series Pilot Program, the Exchange may open up to five Short Term Option Series for each expiration date in that class. The strike price of each Short Term Option Series will be fixed at a price per share, with at least two strike prices above and two strike prices below the value of the underlying security or calculated index value at about the time that Short Term Option Series is opened for trading on the Exchange. .04 - .10 No Change.

* * * * *

Rule 24.1 - Definitions (a) – (y) No Change. Quarterly Options Series (z) The term “Quarterly Options Series” means, for the purposes of Chapter XXIV, a series in an options class that is approved for listing and trading on the Exchange in which the series is opened for trading on any business day and that expires at the close of business on the last business day of a calendar quarter. …Interpretations and Policies: .01 No Change.

* * * * *

Rule 24.4 - Position Limits for Broad-Based Index Options (a) – (d) No Change. (e) Positions in Short Term Option series and Quarterly Options Series shall be aggregated with positions in options contracts on the same index. …Interpretations and Policies: .01-.04 No Change.

* * * * *

Rule 24.4A - Position Limits for Industry Index Options (a) – (c) No Change. (d) Positions in Short Term Option series and Quarterly Options Series shall be aggregated with positions in options contracts on the same index. …Interpretations and Policies: .01-.02 No Change.

* * * * * Rule 24.9 - Terms of Index Option Contracts


Rule 24.9(a) General. (1) No Change. (2) Expiration Months. Index option contracts may expire at three-month intervals or in consecutive months. The Exchange may list up to six expiration months at any one time, but will not list index options that expire more than twelve months out. Notwithstanding the preceding restriction, until the expiration in November 2004, the Exchange may list up to seven expiration months at any one time for the SPX, MNX and DJX index option contracts, provided one of those expiration months is November 2004. Short Term Option Series Pilot Program. Notwithstanding the preceding restriction, after an index option class has been approved for listing and trading on the Exchange, the Exchange may open for trading on any Friday that is a business day (“Short Term Option Opening Date”) series of options on that class that expire on the next Friday that is a business day (“Short Term Option Expiration Date”). If the Exchange is not open for business on a Friday, the Short Term Option Opening Date will be the first business day immediately prior to that Friday. Similarly, if the Exchange is not open for business on a Friday, the Short Term Option Expiration Date will be the first business day immediately prior to that Friday. The Exchange may continue to list Short Term Option Series until the Short Term Option Series Pilot Program expires on July 12, 2006. Regarding Short Term Option Series, the Exchange may select up to five currently listed option classes on which Short Term Option Series may be opened on any Short Term Option Opening Date. In addition to the five-option class restriction, the Exchange also may list Short Term Option Series on any option classes that are selected by other securities exchanges that employ a similar Pilot Program under their respective rules. For each index option class eligible for participation in the Short Term Option Series Pilot Program, the Exchange may open up to five Short Term Option Series on index options for each expiration date in that class. The strike price of each Short Term Option Series will be fixed at a price per share, with at least two strike prices above and two strike prices below the calculated value of the underlying index at about the time that Short Term Option Series is opened for trading on the Exchange. No Short Term Option Series on an index option class may expire in the same week during which any monthly option series on the same index class expire or, in the case of QIXs, in the same week during which the QIXs expire. Quarterly Options Series Pilot Program. Notwithstanding the preceding restriction, for a one-year pilot period, the Exchange may list and trade options series that expire at the close of business on the last business day of a calendar quarter (“Quarterly Options Series”). The Exchange may list Quarterly Options Series for up to five (5) currently listed options classes that are either index options or options on ETFs. In addition, the Exchange may also list Quarterly Options Series on any options classes that are selected by other securities exchanges that employ a similar pilot program under their respective rules. The one-year pilot will commence either the day the Exchange first initiates trading in a Quarterly Options Series or July 24, 2006, whichever is earlier. The Exchange may list series that expire at the end of the next consecutive four (4) calendar quarters, as well as the fourth quarter of the next calendar year. For example, if the Exchange is trading Quarterly Options Series in the month of May 2006, it may list series that expire at the end of the second, third, and fourth quarters of 2006, as well as the first and fourth quarters of 2007. Following the second quarter 2006 expiration, the Exchange could add series that expire at the end of the second quarter of 2007. Quarterly Options Series shall be P.M. settled. The strike price of each Quarterly Options Series will be fixed at a price per share, with at least two strike prices above and two strike prices below the value of the underlying security at about the time


that a Quarterly Options Series is opened for trading on the Exchange. The Exchange shall list strike prices for a Quarterly Options Series that are within $5 from the closing price of the underlying on the preceding day. The Exchange may open for trading additional Quarterly Options Series of the same class if the current index value of the underling index moves substantially from the exercise price of those Quarterly Options Series that already have been opened for trading on the Exchange. The exercise price of each Quarterly Options Series open for trading on the Exchange shall be reasonably related to the current index value of the underlying index to which such series relates at or about the time such series of options is first opened for trading on the Exchange. The term “reasonably related to the current index value of the underlying index” means that the exercise price is within thirty percent (30%) away from the current index value. The Exchange may also open for trading additional Quarterly Options Series that are more than thirty percent (30%) away from the current index value, provided that demonstrated customer interest exists for such series, as expressed by institutional, corporate, or individual customers or their brokers. Market-Makers trading for their own account shall not be considered when determining customer interest under this provision. (3) – (5) No Change. (b) – (c) No Change. . . . Interpretations and Policies: .01 - .12 No Change. .13 The interval between strike prices on Short Term Options Series and Quarterly Options Series shall be the same as the interval for strike prices for series in that same options class that expire in accordance with the normal monthly expiration cycle. .14 No Change. ___________________________________________________________________________________ SR-CBOE-2006-64 AIM Extension On June 30, 2006, the Exchange filed Rule Change File No. SR-CBOE-2006-64, which filing proposes to extend for one year two components of the Automated Improvement Mechanism (AIM) that were approved by the SEC as pilot programs: (1) no minimum order size requirement; and (2) that an internally locked market on the Exchange would terminate the AIM auction. Any questions regarding the rule change may be directed to Angelo Evangelou, Legal Division, at 312-786-7464. Additions are underlined. Deletions are [bracketed and stricken].

Rule 6.74A Automated Improvement Mechanism (“AIM”) Notwithstanding the provisions of Rule 6.74, a member that represents agency orders may electronically execute an order it represents as agent ("Agency Order") against principal interest or against a solicited order provided it submits the Agency Order for electronic execution into the AIM auction (“Auction”) pursuant to this Rule. (a)-(c) No change.

…Interpretations and Policies: .01 - .02 No change.


.03 Initially, and for at least a Pilot Period expiring on July 18, 2007[2006], there will be no minimum size requirement for orders to be eligible for the Auction. During this Pilot Period, the Exchange will submit certain data, periodically as required by the Commission, to provide supporting evidence that, among other things, there is meaningful competition for all size orders and that there is an active and liquid market functioning on the Exchange outside of the Auction mechanism. Any data which is submitted to the Commission will be provided on a confidential basis. .04 - .05 No change. .06 Subparagraph (b)(2)(E) of this rule will be effective for a Pilot Period until July 18, 2007[2006]. During the Pilot Period, the Exchange will submit certain data, periodically as required by the Commission, relating to the frequency with which early termination of the Auction occurs pursuant to this provision as well as any other provision, and also the frequency with which early termination pursuant to this provision results in favorable pricing for the Agency Order. Any data which is submitted to the Commission will be provided on a confidential basis.

______________________________________________________________________________ SR-CBOE-2006-63 Marketing Fee Refund Modification On June 30, 2006, the Exchange filed Rule Change File No. SR-CBOE-2006-63, which filing proposes to amend CBOE’s marketing fee to modify the manner in which marketing fee funds collected during a calendar quarter are refunded. Specifically, this filing proposes if 80% or more of the accumulated funds in a given month are paid out by the DPM/LMM or Preferred Market-Maker, there will not be a rebate for that month and the funds will carry over and will be included in the pool of funds to be used by the DPM/LMM or Preferred Market-Maker the following month. Any questions regarding the rule change may be directed to Patrick Sexton, Legal Division, at 312-786-7467. _____________________________________________________________________________________ SR-CBOE-2006-62 Obvious Error On July 7, 2006, the Exchange filed Rule Change File No. SR-CBOE-2006-62, which filing proposes to amend Rule 24.16, which is the Exchange’s rule applicable to the nullification and adjustment of transactions in index options, ETFs and options on HOLDRS. The Exchange is proposing to amend the Rule in order to (i) re-define what constitutes an “obvious price error;” (ii) provide for a Market-Maker to Market-Maker adjustment of obvious price errors (currently such erroneous transactions are subject to nullification), (iii) eliminate the nullification and adjustments provisions for erroneous quantity errors, and (iv) make various non-substantive changes to the text of the Rule. Any questions regarding the rule change may be directed to Jennifer Lamie, Legal Division, at 312-786-7576. Rule 24.16. Nullification and Adjustment of [Index Option] Transactions in Index Options, Options on ETFs and Options on HOLDRS RULE 24.16. This Rule only governs the nullification and adjustment of transactions involving index options and options on ETFs or HOLDRS[s]. Rule 6.25 governs the nullification and adjustment of transactions involving equity options. Paragraphs (a)(1), [(2),] ([6]5) and ([7]6) of this Rule have no applicability to trades executed in open outcry. (a) Trades Subject to Review A member or person associated with a member may have a trade adjusted or nullified, as provided herein, if, in addition to satisfying the procedural requirements of paragraph (b) below, one of the following conditions is satisfied:


(1) Obvious Price Error: An obvious price[ing] error will be deemed to have occurred when the execution price of a transaction is above or below the fair market value of the option by at least a prescribed minimum error amount. For series trading with normal bid-ask differentials as established in Rule 8.7(b)(iv), the prescribed minimum error amount shall be: [(a) the greater of $0.10 or 10% for options trading under $2.50; (b) 10% for options trading at or above $2.50 and under $5; or (c) $0.50 for options trading at $5 or higher.]

Fair Market Value Minimum Error Amount Below $2 $0.125 $2 to $5 $0.20 Above $5 to $10 $0.25 Above $10 to $20 $0.40 Above $20 $0.50 For series trading with bid-ask differentials that are [greater than]a multiple of the widths established in Rule 8.7(b)(iv), the prescribed minimum error amount shall have the same multiple applied to the minimum error amount prescribed above[be: (a) the greater of $0.20 or 20% for options trading under $2.50; (b) 20% for options trading at or above $2.50 and under $5; or (c) $1.00 for options trading at $5 or higher].

(i) Definition of Fair Market Value: For purposes of this Rule only, the fair market value

of an option is the midpoint of the national best bid and national best offer for the series (across all exchanges trading the option) as determined by Trading Officials. In multiply listed issues, if there are no quotes for comparison purposes, fair market value shall be determined by Trading Officials. For singly-listed issues, fair market value shall be the first non-erroneous quote after the transaction(s) in question [that does not reflect the erroneous transaction(s)]as determined by Trading Officials. For transactions occurring as part of the Rapid Opening System ("ROS trades") or Hybrid Opening System ("HOSS"), fair market value shall be the first non-erroneous quote after the transaction(s) in question [that does not reflect the erroneous transaction(s)]as determined by Trading Officials.

(ii) Price Adjustment or Nullification: Obvious price errors will be adjusted or nullified in

accordance with the following: (A) Transactions between CBOE Market-Makers: Where both parties to the

transaction are CBOE Market-Makers, the execution price of the transaction will be adjusted by Trading Officials upon notification pursuant to paragraph (b) and in accordance with the adjustment and nullification provisions of paragraph (c)(1) below.

(B) Transactions involving at least one non-CBOE Market-Maker: Where one

of the parties to the transaction is not a CBOE Market-Maker, the transaction will be adjusted or nullified by Trading Officials upon notification pursuant to paragraph (b) and in accordance with the adjustment and nullification provisions of paragraph (c)(3) below.

[(2) Obvious Quantity Error: An obvious error in the quantity term will be deemed to occur when

the transaction size exceeds the responsible broker or dealer's average disseminated size over the previous four hours by a factor of five (5) times. The quantity to which a transaction shall be adjusted from an obvious quantity error shall be the responsible broker or dealer's average disseminated size over the previous four trading hours (which may include the previous trading day).]

(3) – (7) Renumbered to (2) – (6)

(b) No change. (c) Adjustments and Nullifications


(1) Transactions between CBOE Market-Makers pursuant to paragraph (a)(1) shall be adjusted to the fair market value minus (plus) the prescribed minimum error amount with respect to an erroneous sell (buy) transaction. If the adjusted price is not in a multiple of the applicable minimum trading increment, the adjusted price will be rounded down (up) to the next price that is a multiple of the applicable minimum trading increment with respect to an erroneous sell (buy) transaction. (2) Transactions between CBOE Market-Makers pursuant to paragraphs (a)(2) – (a)(5) shall be nullified.

(3) [Unless otherwise specified in Rule 24.16(a)(1)-(6), t]Transactions involving at least one non-CBOE Market-Maker pursuant to paragraphs (a)(1) through (a)(5) will be adjusted provided the adjusted price does not violate the [customer's]non-CBOE Market-Maker’s limit price. Otherwise, the transaction will be nullified. With respect to Rule 24.16(a)(1)(ii)(B) – (a)(4)[(5)], the price to which a transaction shall be adjusted shall be the National Best Bid (Offer) immediately following the erroneous transaction with respect to a sell (buy) order entered on the Exchange. For ROS or HOSS transactions, the price to which a transaction shall be adjusted shall be based on the first non-erroneous quote after the erroneous transaction on CBOE. With respect to Rule 24.16(a)([6]5), the transaction shall be adjusted to a price that is $0.10 under parity. (d) – (e) No change. . . . Interpretations and Policies: .01 - .02 No change. _____________________________________________________________________________________ SR-CBOE-2006-49 Weekly Series Pilot Program On June 27, 2006, the Exchange filed Rule Change File No. SR-CBOE-2006-49, which filing proposes to modify the Short Term Option Series (referred to as "Weekly Series") pilot program (Rules 5.5 and 24.9) to change the number of series that may be listed for a pilot class from five series to seven series. Any questions regarding the rule change may be directed to Jennifer Lamie, Legal Division, at 312-786-7576. Additions are underlined. Deletions are [bracketed and stricken].

Rule 5.5. Option Contracts Open for Trading

(a) – (c) No change.

(d) Short Term Option Series Pilot Program. After an option class has been approved for listing and trading on the Exchange, the Exchange may open for trading on any Friday that is a business day (“Short Term Option Opening Date”) series of options on that class that expire on the next Friday that is a business day (“Short Term Option Expiration Date”). If the Exchange is not open for business on a Friday, the Short Term Option Opening Date will be the first business day immediately prior to that Friday. Similarly, if the Exchange is not open for business on a Friday, the Short Term Option Expiration Date will be the first business day immediately prior to that Friday. Regarding Short Term Option Series, [no new Short Term Option Series may be added after the open of business on the Short Term Option Opening Date and] no Short Term Option Series may expire in the same week in which monthly option series on the same class expire.


The Exchange may continue to list Short Term Option Series until the Short Term Option Series Pilot Program expires on July 12, 2007.

. . . Interpretations and Policies .01 - .02 No change. .03 Except for Short Term Option Series, the Exchange usually will open four expiration months for each class of options open for trading on the Exchange: the first two being the two nearest months, regardless of the quarterly cycle on which that class trades; the third and fourth being the next the two nearest term months (May and June) and the next two expiration months of the cycle (July and October). When the May series expires, the Exchange would add January series. When the June series expires, the Exchange would add August series as the next nearest month, and would not add April). Regarding Short Term Option Series, the Exchange may select up to five currently listed option classes on which Short Term Option Series may be opened on any Short Term Option Opening Date. In addition to the five-option class restriction, the Exchange also may list Short Term Option Series on any option classes that are selected by other securities exchanges that employ a similar Pilot Program under their respective rules. For each option class eligible for participation in the Short Term Option Series Pilot Program, the Exchange may open up to [five]seven Short Term Option Series for each expiration date in that class. The strike price of each Short Term Option Series will be fixed at a price per share, with [at least two]approximately the same number of strike prices being opened above and [two strike prices] below the value of the underlying security or calculated index value at about the time that the Short Term Option Series [is]are initially opened for trading on the Exchange (e.g., if seven series are initially opened, there will be at least three strike prices above and three strike prices below the value of the underlying security or calculated index value). If the Exchange opens less than seven Short Term Option Series for a Short Term Option Expiration Date, additional series may be opened for trading on the Exchange when the Exchange deems it necessary to maintain an orderly market, to meet customer demand or when the market price of the underlying security moves substantially from the exercise price or prices of the series already opened. .04 - .09 No change.

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Rule 24.9 Terms of Index Option Contracts Rule 24.9 (a) General. (1) No change.

(2) Expiration Months. Index option contracts may expire at three-month intervals or in consecutive months. The Exchange may list up to six expiration months at any one time, but will not list index options that expire more than twelve months out. Notwithstanding the preceding restriction, until the expiration in November 2004, the Exchange may list up to seven expiration months at any one time for the SPX, MNX and DJX index option contracts, provided one of those expiration months is November 2004.

Short Term Option Series Pilot Program. Notwithstanding the preceding restriction, after

an index option class has been approved for listing and trading on the Exchange, the Exchange may open for trading on any Friday that is a business day (“Short Term Option Opening Date”) series of options on that class that expire on the next Friday that is a business day (“Short Term Option Expiration Date”). If the Exchange is not open for business on a Friday, the Short Term Option Opening Date will be the first business day immediately prior to that Friday. Similarly, if the


Exchange is not open for business on a Friday, the Short Term Option Expiration Date will be the first business day immediately prior to that Friday.

The Exchange may continue to list Short Term Option Series until the Short Term Option Series Pilot Program expires on July 12, 2007.

Regarding Short Term Option Series, the Exchange may select up to five currently listed

option classes on which Short Term Option Series may be opened on any Short Term Option Opening Date. In addition to the five-option class restriction, the Exchange also may list Short Term Option Series on any option classes that are selected by other securities exchanges that employ a similar Pilot Program under their respective rules. For each index option class eligible for participation in the Short Term Option Series Pilot Program, the Exchange may open up to [five]seven Short Term Option Series on index options for each expiration date in that class. The strike price of each Short Term Option Series will be fixed at a price per share, with [at least two]approximately the same number of strike prices being opened above and [two strike prices] below the calculated value of the underlying index at about the time that the Short Term Option Series [is]are initially opened for trading on the Exchange (e.g., if seven series are initially opened, there will be at least three strike prices above and three strike prices below the value of the underlying security or calculated index value). If the Exchange has opened less than seven Short Term Option Series for a Short Term Option Expiration Date, additional series may be opened for trading on the Exchange when the Exchange deems it necessary to maintain an orderly market, to meet customer demand or when the current value of the underlying index moves substantially from the exercise price or prices of the series already opened. No Short Term Option Series on an index option class may expire in the same week during which any monthly option series on the same index class expire or, in the case of QIXs, in the same week during which the QIXs expire.

(3) – (5) No change.

(b) – (c) No change. . . . Interpretations and Policies:

.01 - .12 No change. ___________________________________________________________________________________ APPROVED RULE CHANGE(S) The Securities and Exchange Commission ("SEC") has approved the following change(s) to Exchange Rules pursuant to Section 19(b) of the Securities Exchange Act of 1934, as amended ("the Act"). Copies are available on the CBOE public website at www.cboe.com/legal/effectivefiling.aspx. The effective date of the rule change is the date of approval unless otherwise noted. ___________________________________________________________________________________ SR-CBOE-2006-54 Fee Schedule Relating to DPM Linkage Fee Credits On June 29, 2006, the SEC approved Rule Change File No. SR-CBOE-2006-54, which filing proposes to amend its Fees Schedule to retroactively credit Designated Primary Market-Makers ("DPMs") for certain fees they incur in executing orders under the Intermarket Options Linkage Plan ("Linkage"). Any questions regarding the rule change may be directed to Jamie Galvan, Legal Division, at 312-786-7058.


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