Thu, Jul 27, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

CBOE Futures Exchange to launch first options on futures contract

Thursday, September 09, 2010
Opalesque Industry Update - The CBOE Futures Exchange (CFE) today announced that on September 28, it plans to introduce trading in its first options on a futures contract – Weekly options on VIX futures (ticker symbol - VOW), subject to regulatory approval. All key pieces of the VIX product suite will now be available on CBOE's electronic technology platform, CBOEdirect – cash-settled CBOE Volatility Index (VIX) options, VIX futures, options on volatility-related exchange traded notes, and, later this month, Weekly options on VIX futures.

"The addition of Weekly options on VIX futures, which incorporates a version of the popular 'Weeklys' expirations on security options, brings an added dimension to CBOE's suite of volatility products. It also underscores our ability to seamlessly support multiple products and their unique specifications on a single platform," CBOE President and COO Edward Joyce, said. "We've taken the best features of Weeklys expirations, further refined them for use with options on VIX futures, and created another way for customers to manage volatility."

"We expect that Weekly options on VIX futures will attract sophisticated investors, traders and institutions that are looking for more ways to construct unique exposures to volatility over a shorter timeframe," said CFE Managing Director Andrew Lowenthal. "We see the contract being used in a number of ways – as a shorter-term play on implied volatility that's independent of the direction and level of stock prices, to hedge equity returns and to diversify portfolios."

Lowenthal noted that market participants should recognize differences between currently traded "Weeklys" on individual equity options, index options and ETF options classes and the soon-to-be-introduced Weekly options on VIX futures.

  • Weekly options on VIX futures will have four consecutive contracts with weekly expirations, and CFE will add a new contract when the near-term contract expires; investors can select a contract with either one, two, three or four weeks to expiration, giving added flexibility to choose a desired timeframe. (Current Weeklys on security options begin trading on Thursdays and expire the following Friday, approximately a one-week timeframe.)
  • Exercise for Weekly options on VIX futures will be American style, with exercise allowable on any day up to and including the expiration date.
  • Expiration for Weekly options on VIX futures will be on Fridays (unless a CFE holiday), and will never correspond with VIX futures expiration dates (i.e., the Wednesday that is 30 days prior to an SPX option expiration date).
  • Settlement for Weekly options on VIX futures will feature physical settlement – one futures contract for each expiring options contract.

CFE, launched in 2004, currently offers futures on four contracts, including: the CBOE Volatility Index (VIX), CBOE mini-VIX (VM), CBOE S&P 500 3-Month Variance (VT) and CBOE S&P 500 12-Month Variance (VA). For the first eight months of 2010, CFE trading volume totaled more than 2.2 million contracts, compared with just under 500,000 contracts during the same period in 2009, a 348-percent year-over-year volume increase. Corporate website: http://www.cboe.com/

- FG

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Investing - Hedge fund CQS favors structured credit, Direct lending funds' fading all-weather appeal, Funds hunt for cracks in most-prized US shopping malls[more]

    Hedge fund CQS favors structured credit From BArrons.com: A hedge fund manager that can invest across the investment landscape says in his latest semi annual report this week that he's finding opportunities in structured credit -- particularly the shorter term, floating rate kind. Exampl

  2. Launches - Bitcoin hedge fund launches ethereum-subscribed ICO investment vehicle, Jersey players institutionalize first regulated crypto-currency hedge fund[more]

    Bitcoin hedge fund launches ethereum-subscribed ICO investment vehicle From Coindesk.com: The operators of a regulated, Jersey-based bitcoin hedge fund have officially closed a new $5 million fund aimed at investing in cryptocurrency tokens and initial coin offerings (ICOs). Backed by fun

  3. SWFs - China Wealth fund backs TPG lender as part of U.S. property push[more]

    From Bloomberg.com: China Investment Corp., the sovereign wealth fund that controls $814 billion in assets, is betting on U.S. real estate by investing in a commercial real estate lender formed by the money management firm TPG. In conjunction with last week's initial public offering of TPG RE Financ

  4. Months to minutes: Enigma launch aims to boost crypto hedge fund creation[more]

    From Coindesk.com: What if starting a hedge fund was as easy as downloading an API? A startup incubated at MIT Media Lab is today revealing a product designed with this ease-of-use in mind. Called Catalyst, the first product offering by blockchain startup Enigma aims to trigger nothing short of an e

  5. Seward & Kissel launches new compliance service[more]

    Bailey McCann, Opalesque New York: The law firm that formed the first hedge fund - Seward & Kissel - has launched a new compliance service for asset managers. Seward & Kissel Regulatory Compliance, or SKRC, offers full-scale regulatory compliance consulting solutions provided by the firm's attor