Sun, Jun 26, 2016
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. Opalesque Roundup: Hedge funds shrink as liquidations outpace new launches in Q1: hedge fund news, week 27[more]

    In the week ending 17 May, 2016, HFR said hedge fund liquidations declined narrowly to begin 2016 after rising sharply to conclude 2015, as investors positioned f

  2. Europe - Hedge funds keep powder dry over big Brexit bets, Hedge funds sense profit in Europe shock waves after Brexit vote, Soros warns Brexit may cause pound plunge worse than Black Wednesday, After Brexit: What will happen if Britain votes to leave the UK?[more]

    Hedge funds keep powder dry over big Brexit bets From FT.com: Hedge funds are shying away from big bets on Brexit, with many unwilling to risk further losses having already suffered a painful first half of the year. With the outcome of a UK vote on the country’s membership of the Europea

  3. News Briefs - ’Flash Boys’ get green light to launch stock exchange, Pimco says ‘storm is brewing’ in U.S. commercial real estate, Bankers get ready to rumble at Hedge Fund Fight Night, AIMA Australia celebrates 15th anniversary[more]

    ’Flash Boys’ get green light to launch stock exchange In an investing environment ruled by fast, the newest U.S. public stock exchange is banking on slow. Well, slower. IEX Group, which won Securities and Exchange Commission approval on Friday to go head-to-head with the New York Stock E

  4. Blackstone buys minority stake in New York-based credit hedge fund Marathon[more]

    Benedicte Gravrand, Opalesque Geneva: Blackstone Strategic Capital Holdings Fund, a vehicle managed by Blackstone Alternative Asset Management (BAAM), has acquired a passive, minority interest in Marathon Asset Management, for an undisclosed sum. Based in New York,

  5. Visium hedge fund manager Sanjay Valvani found dead[more]

    Benedicte Gravrand, Opalesque London: A hedge fund manager connected with an insider trading case has apparently committed suicide. Sanjay Valvani, 44, a hedge fund manager at New York-based Visium Asset Management, was found dead in an apparent suicide on 21 June in his Brooklyn residence,