Archived CBOE, CBSX, & CFE Press Releases


FOR IMMEDIATE RELEASE
  
              

CBOE TO LAUNCH S&P 500  DIVIDEND INDEX OPTIONS MARCH 5

New Options Contract Allows Market Participants to Take Positions On S&P 500 Dividend Changes for the First Time


CHICAGO, IL, February 17, 2010 - The Chicago Board Options Exchange (CBOE) today announced plans to begin trading options on the S&P 500® Dividend Index (ticker symbol - DVS) on Friday, March 5, 2010. The first contract of its kind in the U.S., S&P 500 Dividend Index options will be listed exclusively at CBOE. 

The S&P 500 Dividend Index, calculated by Standard & Poor's, represents the ordinary cash dividends for corporations comprising the S&P 500 Index, accumulated over a quarterly "accrual period."

Options on the S&P 500 Dividend Index will offer investors the opportunity to take a broad position on the direction of dividend payments of U.S. stocks, allowing them to directly hedge risks based on changes in the dividend-paying policies of stocks comprising the S&P 500 Index. Investors will have the ability to trade the difference between the expected dividends during an accrual period and the actual dividends over that same period.

Because the S&P 500 Dividend Index is calculated using the same set of component securities, same shares outstanding, same capitalization-weighting methodology and same index divisor as are used to calculate the S&P 500 Index, DVS options can dovetail with trading of S&P 500 Index (SPX) options.  For this reason, S&P 500 Dividend Index options will appeal to market makers who use dividend estimates when pricing options.    

"Until now, there has been no index option in the U.S. that tracks cumulative dividend changes on S&P 500 stocks -- and no way to hedge risk on lower-than-expected dividends or pursue opportunities on the potential for rising dividends. With S&P 500 Dividend Index options,  anyone who collects dividends or wants to trade based on the difference between realized and implied dividends will have a way to register market sentiment," said CBOE Chairman and CEO William J. Brodsky.

"Dividends have certainly attracted investor attention over the past few years, as both a means to create a well-diversified portfolio and as an indicator of the overall health of the U.S. equity markets," said Robert Shakotko, Managing Director at S&P Indices.  "Standard & Poor's is the first major index provider in the U.S. to offer an index that provides an explicit measure of dividend payout from the parent index - in this case, the S&P 500. We are proud to be working with CBOE, our longtime exchange partner, to bring products based on this new index to the exchange-traded marketplace."

Group One Trading, LP has been named the Designated Primary Market Maker (DPM) for S&P 500 Dividend Index options.

 

Quarterly Accrual Period

The quarterly accrual period runs from the business day after the third Friday of a quarterly options expiration month (March, June, September or December) through the third Friday of the next quarterly options expiration month.  The S&P 500 Dividend Index, which is expressed in S&P 500 Index points, will be reset to zero at the end of each quarterly period as defined above. The quarterly nature of the index is designed to reflect the payment pattern of U.S corporate dividends, which typically have a set quarterly payment. Quarterly rebalancing also coincides with the quarterly expirations of S&P 500 options and futures.

For additional information on S&P 500 Dividend Index options, including contract specifications, price charts  ticker symbols and frequently-asked questions, see www.cboe.com/DVS.

Chicago Board Options Exchange (CBOE), the largest U.S. options exchange and creator of listed options, continues to set the bar for options trading through product innovation, trading technology and investor education. CBOE offers equity, index and ETF options, including proprietary products, such as S&P 500 options (SPX), the most active U.S. index option, and options on the CBOE Volatility Index (VIX), the world's barometer for market volatility. Other groundbreaking products engineered by CBOE include equity options, security index options, LEAPS, FLEX options, and benchmark products, such as the CBOE S&P 500 BuyWrite Index (BXM). CBOE's Hybrid Trading System incorporates electronic and open-outcry trading, enabling customers to choose their trading method.  CBOE's Hybrid is powered by CBOEdirect, a proprietary, state-of-the-art electronic platform that also supports the CBOE Futures Exchange (CFE), CBOE Stock Exchange (CBSX) and OneChicago. CBOE is home to the world-renowned Options Institute and www.cboe.com, named "Best of the Web" for options information and education.

CBOE is regulated by the Securities and Exchange Commission (SEC), with all trades cleared by the AAA-rated Options Clearing Corporation (OCC).    

Press contacts:

Gail Osten                                                                           
(312) 786-7123                                                   
osten@cboe.com 

Gary Compton 
(312) 786-7612   
comptong@cboe.com

 

CBOE®, Chicago Board Options Exchange®, CBOEdirect®, CBOE Volatility Index®, VIX®, FLEX®,, Hybrid®, LEAPS®, CBSX® and CBOE Stock Exchange® are registered trademarks of Chicago Board Options Exchange, Incorporated (CBOE).   SPXSM, BXMSM and The Options InstituteSM are service marks of CBOE.  CFE® is a registered trademark and CBOE Futures ExchangeSM is a service mark of CBOE Futures Exchange, LLC.    S&P®, and S&P 500® are registered trademarks of the McGraw-Hill Companies, Inc. and are licensed for use by CBOE. 

Standard & Poor's does not promote, market, sell or endorse any product based upon its indices.

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state or jurisdiction in which an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

In connection with the proposed restructuring transaction, CBOE Holdings, Inc. ("CBOE Holdings") has filed certain relevant materials with the United States Securities and Exchange Commission (SEC), including a registration statement on Form S-4. Members are encouraged to read the registration statement, including the proxy statement/prospectus that are a part of the registration statement, because it contains important information about the proposed transaction. Members are able to obtain a free copy of the proxy statement/prospectus, as well as the other filings containing information about CBOE Holdings and the Chicago Board Options Exchange, Incorporated ("CBOE"), without charge, at the SEC's Web site, http://www.sec.gov/, and the companies' website, http://www.cboe.com/. In addition, CBOE members may obtain free copies of the proxy statement/prospectus and other documents filed by CBOE Holdings or the CBOE from CBOE Holdings by directing a request to the Office of the Secretary, CBOE Holdings, Inc., 400 South LaSalle Street, Chicago, Illinois 60605.

 
CBOE Holdings, the CBOE and their respective directors, executive officers and other employees may be deemed to be participants in the solicitation of proxies in connection with the proposed transaction. Information about the directors and executive officers of CBOE Holdings and of the CBOE is available in the prospectus/proxy statement.