Archived CBOE, CBSX, & CFE Press Releases

FOR IMMEDIATE RELEASE

   

CBOE FUTURES EXCHANGE (CFE) TO LAUNCH FIRST OPTIONS CONTRACT

-- Weekly Options on VIX Futures Expand CBOE Volatility Franchise

-- Multiple Volatility Index Products Available on One Platform

INTERLAKEN, SWITZERLAND, September 9, 2010 - The CBOE Futures Exchange (CFE) today announced that on September 28, it plans to introduce trading in its first options on a futures contract - Weekly options on VIX futures (ticker symbol - VOW), subject to regulatory approval.  All key pieces of the VIX product suite will now be available on CBOE's electronic technology platform, CBOEdirect - cash-settled CBOE Volatility Index (VIX) options, VIX futures, options on volatility-related exchange traded notes, and, later this month, Weekly options on VIX futures. 

"The addition of Weekly options on VIX futures, which incorporates a version of the popular 'Weeklys' expirations on security options, brings an added dimension to CBOE's suite of volatility products. It also underscores our ability to seamlessly support multiple products and their unique specifications on a single platform," CBOE President and COO Edward Joyce, said.  "We've taken the best features of Weeklys expirations, further refined them for use with options on VIX futures, and created another way for customers to manage volatility."

"We expect that Weekly options on VIX futures will attract sophisticated investors, traders and institutions that are looking for more ways to construct unique exposures to volatility over a shorter timeframe," said CFE Managing Director Andrew Lowenthal. "We see the contract being used in a number of ways - as a shorter-term play on implied volatility that's independent of the direction and level of stock prices, to hedge equity returns and to diversify portfolios."

Lowenthal noted that market participants should recognize differences between currently traded "Weeklys" on individual equity options, index options and ETF options classes and the soon-to-be-introduced Weekly options on VIX futures.

  • Weekly options on VIX futures will have four consecutive contracts with weekly expirations, and CFE will add a new contract when the near-term contract expires; investors can select a contract with either one, two, three or four weeks to expiration, giving added flexibility to choose a desired timeframe.  (Current Weeklys on security options begin trading on Thursdays and expire the following Friday, approximately a one-week timeframe.)
  • Exercise for Weekly options on VIX futures will be American style, with exercise allowable on any day up to and including the expiration date.
  • Expiration for Weekly options on VIX futures will be on Fridays (unless a CFE holiday), and will never correspond with VIX futures expiration dates (i.e., the Wednesday that is 30 days prior to an SPX option expiration date).  
  • Settlement for Weekly options on VIX futures will feature physical settlement - one futures contract for each expiring options contract.                                         

CFE, launched in 2004, currently offers futures on four contracts, including: the CBOE Volatility Index (VIX), CBOE mini-VIX (VM), CBOE S&P 500 3-Month Variance (VT) and CBOE S&P 500 12-Month Variance (VA).   For the first eight months of 2010, CFE trading volume totaled more than 2.2 million contracts, compared with just under 500,000 contracts during the same period in 2009, a 348-percent year-over-year volume increase.

Product Specifications Overview:

Weekly Options on VIX Futures

Contract Size

 One (1) VIX futures contract

Trading Hours

 8:30 a.m. - 3:15 p.m., Chicago time

Ticker Symbols

 VOW1 - Week 1

                VOW2 - Week 2               

 VOW3 - Week 3

 VOW4 - Week 4

 VOW5 - Week 5 (if needed)

Strike Price Intervals

 May be no less than $0.50

Minimum Price Intervals

 0.05 points

Dollar Value Per Tick

 $50.00 per contract

Exercise Style

 American - any day up to and including the expiration date

Expiration Date/         Last Day to Trade

 Week 1 -- 1st Friday of contract month

 Week 2 -- 2nd Friday of contract month   

 Week 3 -- 3rd Friday of contract month  

 Week 4 -- 4th Friday of contract month  

 Week 5 -- 5th Friday of contract month    (if needed)

Delivery

 Exercise of Weekly VIX Futures Options results in delivery of VIX futures with an expiration date closest to, but after the expiration date of the options contract. 

 

More information on CFE's Weekly options on VIX futures, including full contract specifications, is available at http://cfe.cboe.com/Products/. For additional information on all CBOE volatility products, see www.cboe.com/VIX.

CFE, a wholly-owned subsidiary of CBOE Holdings, Inc. (NASDAQ: CBOE), offers an all-electronic, open-access market model, with traders providing liquidity and making markets.  CFE trades are cleared by the AAA-rated Options Clearing Corporation (OCC). CBOE Futures Exchange is regulated by the Commodity Futures Trading Commission (CFTC).  

 

CBOE Media Contacts:                                                  

Gail Osten                   

(312) 786-7123

osten@cboe.com                     

 

Gary Compton           

(312) 786-7612          

comptong@cboe.com

 

Analyst Contact:

Debbie Koopman                                 

(312) 786-7136

koopman@cboe.com

 

CBOE®, Chicago Board Options Exchange®, CBOEdirect®, CBOE Volatility Index® and VIX® are registered trademarks and SPX and Weeklys are servicemarks of Chicago Board Options Exchange, Incorporated.   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 the Chicago Board Options Exchange, Incorporated pursuant to a License Agreement.

CBOE-FE

 

This press release contains statements which may be considered forward-looking statements within the meaning of the Securities Exchange Act of 1934, including, without limitation, statements regarding operating strategies, future plans and financial results. Forward-looking statements may be accompanied by words such as "anticipate", "believe", "could", "estimate", "expect", "forecast", "intend", "may", "possible", "predict", "project" or similar words, phrases or expressions. Neither CFE nor CBOE Holdings, Inc. undertakes any obligation to update the information contained herein, which speaks only as of the date of this press release.  More detailed information about factors that may affect CFE's or CBOE Holdings, Inc.'s performance may be found in CBOE Holdings, Inc.'s filings with the Securities and Exchange Commission, including its Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 under the heading "Forward-Looking Statements" and/or "Risk Factors". Such discussions regarding risk factors and forward-looking statements are incorporated herein by reference.