Cboe, CBSX, & CFE Press Releases



CHICAGO, September 22, 2008 - Beginning Tuesday, September 23, Chicago Board Options Exchange (CBOE) will add put binary options on the S&P 500 Index (SPX)—ticker BSZ—and on the CBOE Volatility Index (VIX)—ticker BVZ. The contracts, which were launched in July, initially featured call options only.

Binary options have only two outcomes: a payoff of a set amount or nothing at all. Buyers and sellers of binary options—which can be bought or sold throughout the life of the contract—will know precisely how much can be made or lost if the positions are held to expiration. Call options pay $100 if the underlying index settles at or above the pre-set strike price at expiration, or nothing at all if the index settles below the strike price. Put options pay $100 if the underlying index settles below the pre-set strike at expiration, or nothing at all if the index settles at or above the strike price.

In addition, because they are exchange-traded, CBOE binary options have clearing guarantees unavailable in over-the-counter markets.These options can be traded in a regular securities brokerage account that is approved for options.

CBOE's binary options have experienced impressive volume early on, reaching as much as 10,000 to 12,000 contracts on some days and averaging 2,500 contracts daily during September. CBOE has seen strong institutional use of these contracts. Based on customer feedback, we fully expect the addition of puts to spur more brokers-dealers to come on-line to handle binaries, thus enabling more individual investors to access these products.

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 contract months

  • 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:

  •     *BSZ - Last trading day: Thursday before the third Friday of the expiration month, and the options expire on the Saturday following the third Friday of the expiration month.
        *BVZ - Last trading day: Tuesday before the Wednesday that is 30 days prior to the third Friday of the calendar month immediately following the expiring month (e.g., October 21, November 18 and December 16, 2008). The options expire on the Wednesday that is 30 days prior to the third Friday of the calendar month immediately following the expiration month (e.g., October 22, November 19 and December 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.

    CBOE Contacts:
    Gail Osten
    (312) 786-7123

    Gary Compton
    (312) 786-7612

    CBOE® and Chicago Board Options Exchange® are registered trademarks of Chicago Board Options Exchange, Incorporated.

    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.
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