Archived CBOE, CBSX, & CFE Press Releases

FOR IMMEDIATE RELEASE


CBOE TO BEGIN TRADING BINARY OPTIONS ON S&P 500® INDEX (SPXSM) AND CBOE VOLATILITY INDEX® (VIX®)


CHICAGO, June 2, 2008 - The Chicago Board Options Exchange (CBOE) today announced plans to begin trading binary options contracts on the S&P 500 Index (SPX) and on the CBOE Volatility Index (VIX). The U.S. Securities and Exchange Commission approved CBOE's rule filing to list binary options on broad-based indexes on May 22, 2008, and trading is scheduled to start on July 1.

Binary options have just two possible outcomes - a payoff of a set amount or nothing at all. CBOE initially will offer binary call options, which will pay either $100 per contract if the underlying index settles at or above the strike price at expiration, or nothing at all if the underlying index settles below the strike price at expiration. In addition, because they are exchange-traded, CBOE binary options have clearing guarantees unavailable in the over-the-counter market.

CBOE binary options offer a number of strategies for users.For example, a hedger typically using a covered write might use a binary option to avoid giving up too much upside. Buyers of binary options might take a position that the underlying broad-based index will settle above a particular level at expiration, while sellers could take a position that the underlying broad-based index will settle below a threshold.

Both buyers and sellers of binary options will know exactly how much can be made or lost if the positions are held to expiration. In addition, binary option spreads may be traded as a way to take a position that the underlying broad-based index will settle inside or outside a range of index levels.

"CBOE's binary options provide a straightforward way for investors to act on their views of two of the most closely followed indexes in the world, the S&P 500 and the CBOE Volatility Index," said CBOE Chairman and CEO William J. Brodsky. "These products will appeal to the broad range of market participants, including individual investors, hedge funds and institutions, who have an opinion, one way or another, on future price movements in SPX or the VIX."

Through May 2008, volume in SPX options rose to nearly 65 million contracts, and VIX options volume totaled more than ten million contracts, both records for the five-month period. CBOE's wholly owned subsidiary, CBOE Futures Exchange (CFE), also lists futures on the VIX, its flagship product, which in May traded almost 115,000 contracts.

The Designated Primary Market Maker (DPM) for binary options on the S&P 500 Index (ticker symbol BSZ) is Chicago Trading Company; the DPM for binary options on the CBOE Volatility Index (ticker symbol BVZ) is Group One Trading, L.P.


Contract Specifications

Identical for both contracts:
-Multiplier:$100
-Listed Contract Months:Initially, three consecutive, near-term contractmonths
-Quotes:In pennies, ranging from 0 to 1.00
-Minimum Tick Size:0.01 points ($1.00)
-Trading Hours:8:30 a.m. to 3:15 p.m. Chicago time
-Position Limits:1,500,000 contracts on the same side of the market

Contracts vary:
-Last Trading Day and Expiration Dates:
-The last trading day for SPX binary options (BSZ) will be the Thursday before the third Friday of the expiration month, and the options will expire on the Saturday following the third Friday of the expiration month.
-The last trading day for VIX binary options (BVZ) will be the Tuesday before the Wednesday that is 30 days prior to the third Friday of the calendar month immediately following the expiring month (e.g., July 15, August 19 and September 16, 2008).The options will expire on the Wednesday that is 30 days prior to the third Friday of the calendar month immediately following the expiration month (e.g., July 16, August 20 and September 17, 2008).
-Strike Price Intervals: For BSZ, minimum interval of one point; for BVZ, minimum interval of five points
-Settlement of Option Exercise:
-For BSZ, the settlement value of the SPX (or "SET") will be used to determine if the binary option is in, at or out of the money.
-For BVZ, the settlement value of the VIX (or "VRO") will be used to determine if the binary option is in, at or out of the money.


CBOE, the largest options marketplace in the U.S. and the creator of listed options, is regulated by the Securities and Exchange Commission (SEC).For additional information about the CBOE and its products, access the CBOE website at: www.cboe.com/.


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®, XEO® and OEX® are registered trademarks of Chicago Board Options Exchange, Incorporated. SPXSM, XSPSM MNXSM, CBSXSM and CBOE Stock ExchangeSM are service marks of Chicago Board Options Exchange, Incorporated. CFESM and CBOE Futures Exchange are service marks of CBOE Futures Exchange, LLC. Dow Jones®, DJIA®, and DIAMONDS® are registered trademarks of Dow Jones & Company, Inc. Dow Jones Industrial AverageSM and Options on the DowSM are service marks of Dow Jones & Company.CBOE's Options on the Dow based on the Dow Jones Industrial Average and financial products based on the CBOE DJIA Volatility Index are not sponsored, endorsed, marketed or promoted by Dow Jones. S&P®, S&P 100®, S&P 500®, and SPDR are registered trademarks of the McGraw-Hill Companies, Inc. and are licensed for use by the Chicago Board Options Exchange, Incorporated pursuant to a License Agreement. The Russell 2000® Index is a registered trademark of The Frank Russell Company used under license.Nasdaq®, Nasdaq-100®, Nasdaq-100 Index®, and Nasdaq-100 Index Tracking StockSM are trademarks of The Nasdaq Stock Market, Inc. iShares is a service mark of Barclays Global Investors, N.A. "HOLDRS" and "Holding Company Depositary ReceiptS" are service marks of Merrill Lynch & Co., Inc.

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.