- New CFTC-regulated options on futures will physically settle into front-month Cboe Volatility Index (VIX) Futures
- Designed to offer market participants the ability to more granularly manage volatility
- Further expansion of Cboe’s volatility complex following launch of Cboe S&P 500 Variance (VA) futures
Chicago – October 9, 2024 – Cboe Global Markets, Inc. (Cboe: CBOE), the world’s leading derivatives and securities exchange network, today announced its new Options on Cboe Volatility Index (VIX) Futures (Ticker: UX) are planned to begin trading on Cboe Futures Exchange, LLC (CFE) on Monday, October 14.
The new Options on VIX Futures will provide investors an additional tool to help manage U.S. equity market volatility, complementing Cboe’s existing securities-based VIX Index options, which are designed to provide similar risk management and yield enhancement capabilities. Utilizing an option-on-future structure, the new product may allow more market participants, including those restricted from accessing securities-based options, to trade a VIX options product.
Cboe’s VIX Index options have seen record trading volumes during the last two years, with average daily volumes reaching over 851,000 contracts in 2024, up approximately 60% from 2022, as more investors have sought utility the options offer.
“Investors have long utilized VIX options and VIX futures to help hedge and manage volatility exposure, and Cboe is proud to expand our volatility product suite at such a critical time,” said Catherine Clay, Global Head of Derivatives at Cboe. “With its options-on-futures structure, the new Options on VIX Futures will look to meet growing customer demand as Cboe works to provide an efficient and seamless experience to both existing and new CFE market participants. The launch will complement our existing volatility offerings, including the recently launched Cboe S&P 500 Variance futures, and enable more investors with the ability to help manage volatility and risk through the election season and beyond.”
“20 years after Cboe launched VIX futures, followed by VIX options, and helped establish volatility as an asset class, we continue to prioritize product innovation, engage with our customers and bring new exchange-traded volatility derivatives to market,” said Rob Hocking, Head of Product Innovation at Cboe. “We believe there is a strong demand for risk management tools, especially as investors prepare for the upcoming election and the recent change in the Fed’s monetary policy. We’ve seen a shift in how investors are using options on a day-to-day basis, and with Options on VIX Futures having a mid-curve structure and the ability to offer short-term exposure, investors are expected to be able to manage short-term volatility with greater precision.”
Christine Hansen, CEO at IMC US, said: “We are proud to support the expansion of listed volatility offerings from Cboe to meet the varying needs of investors”
Tom Chlada, Chief Operating Officer at Prime Trading, said: “Prime’s investment philosophy is to protect and grow capital, and Cboe’s new Options on VIX Futures will be a very welcomed addition to our toolkit, enabling us to better express views on volatility and fine-tune our risk management approach. We believe the new options will help boost participation and trading opportunities in the volatility space, and we look forward to incorporating this tool in our portfolios.”
Keith DeCarlucci, Chief Investment Officer at Melqart KEAL Macro Fund, said: “VIX futures and options play an important role when managing portfolios, and we welcome Cboe’s further expansion of its exchange-traded volatility tools with Options on VIX Futures. Combined with the recent variance futures launch, we have two new products to leverage.”
Options on VIX futures will have European-style exercise, P.M. settlement and physically settle into front-month VIX future. At launch, CFE will list contract expirations for every day the week of October 21 with two additional Friday expirations. Each weekday beginning October 21, CFE plans to list a new contract for trading expiring on the same weekday in the week or weeks following.
The contracts will be regulated by the Commodity Futures Trading Commission (CFTC) and cleared by The Options Clearing Corporation (OCC).
The upcoming launch of Options on VIX Futures follows the recent launch of Cboe S&P 500 Variance (VA) futures, which are designed to offer a streamlined approach to trading the spread between implied and realized volatility. Both products add to Cboe’s existing volatility suite and provide investors with exchange-traded solutions to manage market volatility ahead of and following the U.S. election.
Source: Cboe Global Markets
