Tue, May 26, 2015
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. T Rowe's challenge to Dell deal may fuel critics of 'appraisal'[more]

    From Reuters.com: An increasingly popular tactic used by hedge funds and others to extract more money from buyouts could soon face a major courtroom test when a big investor in Dell Inc may argue that it should be paid a higher price for the 2013 acquisition of the PC maker. The strategy, known as "

  2. News Briefs - Ergen says LightSquared plan unfairly favors hedge funds, Why hedge fund managers make good advisory clients, I learned a lot about dad-bros after spending 4 days in Vegas with 2,000 hedge funders[more]

    Ergen says LightSquared plan unfairly favors hedge funds LightSquared Inc.’s bankruptcy plan gives hedge funds that invested in the broadband company a leg up while blocking telecommunications firms from competing with it, a fund owned by Dish Network Corp. Chairman Charles Ergen said in

  3. Opalesque Exclusive: SEC approves proposed changes to Form ADV, '40 Act - comment period to follow[more]

    Bailey McCann, Opalesque New York: Hedge funds and providers of liquid alternatives will want to pay close attention to proposed reforms approved by the SEC yesterday. The changes will require more frequent reporting, as well as a closer look into social media, liquid alternative strategies, and

  4. Investing - Hedge funds buy swathes of foreclosed subprimes, force up rents, float rent-bonds, Hedge funds buy Actavis, Valeant. ETFs join the party, The most loved biotechs of big hedge funds, Stocks to buy ... according to hedge funds, Atlantic City bond offering attracts hedge funds as buyers, Okumus Fund Management discloses huge new Ascent Capital Group stake[more]

    Hedge funds buy swathes of foreclosed subprimes, force up rents, float rent-bonds From Boingboing.com: When a giant hedge fund is bidding on all the foreclosed houses in a poor neighborhood, living humans don't stand a chance -- but that's OK, because rapacious investors make great landl

  5. Institutions - Institutional investors turn to real estate, planes, Assets at Boston’s five biggest family nonprofits rise to $3.5bn[more]

    Institutional investors turn to real estate, planes From Joins.com: The National Pension Service and domestic emerging market specialists who did not know where to invest in a low interest rate environment are turning to other investments like the blue-chip real estate market abroad.

 

banner