Cboe Global Markets Set to Launch Options on VIX Futures
In a pivotal expansion of its volatility product offerings, Cboe Global Markets, Inc. (BATS:CBOE) has announced plans to introduce options on Cboe Volatility Index (VIX) futures. This strategic enhancement is aimed at providing market participants with innovative tools to navigate the complexities of market volatility. Scheduled to commence on October 14, 2024, on the Cboe Futures Exchange, LLC (CFE), the launch is contingent upon regulatory approval.
The introduction of options on VIX futures marks a significant addition to Cboe’s already extensive suite of volatility trading and management solutions. Traditionally, investors have leveraged securities-based VIX Index options to manage or gain exposure to market volatility in the broad U.S. equity space. The forthcoming options, however, are based on front-month VIX futures, offering a futures-oriented approach under the regulatory oversight of the Commodity Futures Trading Commission (CFTC). This regulatory framework broadens accessibility, especially for market participants who face restrictions in dealing with U.S. securities-based options.
Rob Hocking, the Head of Product Innovation at Cboe, highlighted the timely introduction of the new products amidst heightened demand for volatility management tools, propelled by increased VIX options trading activity. “As we approach the U.S. election, historically a period of heightened market volatility, our expanded toolkit including options on VIX futures and the upcoming relaunch of variance futures, will empower customers to effectively manage risk,” Hocking stated.
Catherine Clay, Head of Global Derivatives at Cboe, emphasized the anticipated broad appeal of the new options, citing their complementarity to Cboe’s existing products. She noted that by leveraging the existing infrastructure of CFE, the options would offer seamless access to a diverse range of market participants, including Commodity Trading Advisors and Futures Commission Merchants.
The new options on VIX futures are crafted to be European-style, meaning they can only be exercised at expiration and will settle into front-month VIX futures physically. This setup is expected not only to augment the existing VIX Index options but also to facilitate more nuanced hedging strategies and provide a wider choice of expiration dates.
Exclusive to the CFE platform, the options on VIX futures will join an elite roster of volatility products offered by Cboe, reaffirming the exchange’s leadership in the volatility space. This lineup includes the renowned Cboe Volatility Index (VIX) futures, along with the forthcoming launches of Cboe S&P 500 Variance (VA) futures and Cboe S&P 500 Dispersion Index (DSPX) futures, pending regulatory approval.
About Cboe Global Markets
Cboe Global Markets stands as a preeminent derivatives and securities exchange network globally, delivering innovative trading, clearing, and investment solutions worldwide. Its comprehensive offerings span multiple asset classes, including equities, derivatives, and FX, across key markets in North America, Europe, and Asia Pacific. At the heart of its mission, Cboe is dedicated to fostering a trusted, inclusive global marketplace that champions sustainable financial futures for individuals around the globe.
Forward-Looking Statements
This announcement contains forward-looking statements subject to numerous hypotheses, risks, and uncertainties which could cause actual results to materially differ. Factors including changes in economic, political and market conditions, regulatory alterations, and competitive pressures may influence the anticipated launch and success of the options on VIX futures.
