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Safeguards, Clearing and Key Features

CBOE - A Leader in Risk Management Markets with
Clearing Guarantees by the Options Clearing Corporation

Key Features of CBOE Options and CFE Futures

  • Clearance of transactions is guaranteed by the Options Clearing Corporation
  • Price and Quote Transparency
  • Daily Mark-to-market
  • Liquidity for Leading Options and Futures Contracts
  • Competitive Auction Markets
  • Marketplaces Regulated by SEC or CFTC

Highlighted Products and Services at CBOE and CFE:

S&P 500 (SPX) Options
S&P 500® (SPX) options have been key risk management tools for the past quarter century. In 2007, SPX options average daily volume grew to 629,819 contracts (more than $90 billion in notional dollar value), and the year-end open interest was 8.1 million contracts.

Variance Futures
CBOE S&P 500 3-month Variance Futures and CBOE S&P 500 12-month Variance Futures feature daily mark-to-market in a CFTC-regulated marketplace. CBOE S&P 500 3-month Variance Futures are based on the realized, or historical, variance of the S&P 500 Index. CBOE S&P 500 3-month Variance Futures are quoted in terms of variance points, which are defined as realized variance multiplied by 10,000. One variance point is worth $50. For example, a variance calculation of 0.08335 would have a corresponding price quotation in variance points of 833.50, and a contract size of $41,675.00 (833.50 x $50).

Options and Futures on the CBOE Volatility Index (VIX)
Since 1993 the CBOE Volatility Index® (VIX®) has been considered by many to be the world's premier barometer of investor sentiment and market volatility. Many investors are intrigued by VIX futures and options because VIX often has a negative correlation to stock indexes, and there is a high volatility of volatility. In the first two months of 2008, average daily volume for VIX options was more than 101,000 contacts.

CBOE recently introduced CFLEXSM, a new low-cost, internet-based FLEX system that provides investors with:
. The ability to customize key contract terms, like exercise prices, exercise styles and expiration dates
. Virtual elimination of counter-party risk,
. Price discovery in competitive, transparent, auction markets, and
. A secondary market for an opportunity to offset or alter positions before expiration.

CBOE Index Options
CBOE is one of the world's most diversified securities marketplaces, with options on equities, ETFs, indexes and other securities. The top five most-actively traded index and ETF options at CBOE in 2007 were: S&P 500 Index (SPX), iShares Russell 2000 Index Fund (IWM), Standard & Poor's Depositary Receipts (SPY), PowerShares QQQ Trust (QQQQ) and VIX Options (VIX).

CBOE Hybrid
By blending CBOE's leading trading floor technology with its state-of-the-art electronic trading platform, CBOE Hybrid® is a composite of the most valuable aspects of screen-based and floor-based trading environments.

BuyWrite Indexes at CBOE
Studies by the Ibbotson Associates, Callan Associates, and Fund Evaluation Group consulting firms showed that BuyWrite indexes such as the BXM and BXD have had the potential to generate impressive income and risk-adjusted returns with lower volatility.

Options Prices and Transparency
Voluminous data regarding CBOE options prices is available at the CBOE website's price quote page, index option related spreadsheets, and for purchase from Market Data Express. This industry-leading price data provided by CBOE is helping many options investors make more informed investment decisions.

CBOE S&P 500 PutWrite Index (PUT)
The award for Most Innovative Index at the 2007 Super Bowl of Indexing Conference was given to the CBOE S&P 500 PutWrite Index (PUT). The PUT Index is a benchmark that measures the performance of a hypothetical portfolio that sells S&P 500 Index put options against collateralized cash reserves. Since mid-1988, the PUT Index has had better risk-adjusted returns than indexes representing "traditional investments" such as the S&P 500 and 30-year Treasury Bond indexes.2

2 Past performance is not a guarantee of future returns. Please read all information (including the risk disclosures) at the PUT Index price charts web page.

CBOE Volatility Index (VIX)