Options traders can now trade volatility on a weekly expiration basis.
The Chicago Board Options Exchange (CBOE) recently unveiled plans to list options with weekly expirations on the CBOE Volatility Index (VIX Index) beginning Thursday, October 8, 2015.
According to the exchange, offering weekly options now gives investors a full complement of short-term trading and hedging opportunities.
“We received strong interest from our customers in short-term VIX trading, and the initial response to VIX Weeklys futures has been positive. We look forward to building on that favorable response with the upcoming launch of VIX Weeklys options,” said Edward Tilly, chief executive at CBOE “VIX Weeklys are a natural extension and complement to standard VIX options and futures and provide investors with additional opportunities to trade the world’s most widely followed measure of market volatility.”
The closer VIX options get to expiration, the more they tend to track the underlying VIX Index. Contracts with weekly expirations allow investors to implement more targeted buying, selling, spreading and hedging strategies. In general, Weeklys are growing in popularity industrywide because they offer investors the ability to fine-tune their positions.
The listing of VIX Weeklys options adds another tool to an array of long- and short-term trading strategies that can be executed on the VIX Index, the leading benchmark of equity market volatility. The launch of VIX Weeklys options follows that of VIX Weeklys futures, which were introduced at the CBOE Futures Exchange on July 23.
See Also:U.S. Listed Options Volumes Surge in June to 334.5m Contracts on CBOE Strength
The VIX Index is based on real-time prices of options on the S&P 500(r) Index (SPX) and is designed to reflect investors’ consensus expectations for 30-day stock market volatility. Standard VIX futures and options expire monthly. Weekly VIX options expirations will offer convergence to the VIX cash index four to five times per month, instead of once a month.
CBOE may list up to six consecutive weekly expirations for VIX options and futures.
New weekly expirations for VIX futures and options will be listed on Thursdays (excluding holidays) and expire on Wednesdays. Like VIX Weeklys futures, the VIX Weeklys options will be available during regular and extended trading hours.
