The Weekly News Roundup is your weekly recap of CBOE features, options industry news and VIX Index and volatility-related articles from print, broadcast, online and social media outlets.
CBOE Hosts Institutional “VIP” Summit
On Thursday, CBOE hosted its 1st ever Institutional VIP -- “Volatility Investor Program” -- Summit, a day of events for principal volatility managers and institutional allocators that focused on how volatility investing can be utilized to improve portfolio performance. Keynote speaker William Daley, Managing Partner and Head of U.S Operations for Argentière Capital, and former White House Chief of Staff to President Barack Obama, shared his thoughts on the economic and social impacts, both domestic and global, of the upcoming U.S. election.
Portfolios Put on a Happy Face
CBOE announced the launch of its new CBOE S&P 500 Smile Index (SMILE) on Tuesday. The Smile Index is a premium-capture strategy benchmark index based on the steepness of the curve of implied volatilities of S&P 500 (SPX) options, which often resemble a “smile”. This strategy is constructed to perform in bull and bear markets, taking its directional cue from the steepness of the smile as gauged by the ratio of put-to-call prices for SPX options, as an alternative to implied volatility. For more information, see the press release or visit www.cboe.com/smile.
“CBOE Launches S&P Smile Index” – Daniel O’Leary, EQ Derivatives
“CBOE Adds Volatility Smile Index” – Helen Bartholomew, Reuters
“CBOE All Smiles With Vol Index Launch” – Graham Bippart, Global Capital
“CBOE Launches Smile Index Based on Implied Volatilities of S&P 500 Options” – Hedge Week
Options…What Are They Good For? Absolutely Everything
In 1973, the Chicago Board Options Exchange introduced options to the financial world. Today, options are used by virtually all major market participants, from mutual fundss to pension funds, to institutional and retail investors. New to options? This read is a great place to start.
“How to Use Options to Beat the Market” – Steven M. Sears, Barron’s
Volume “Curves” Higher
CurveGlobal, the European interest rate futures market, turned one-month old October 26, and is off to a solid start, trading over 63,000 contracts the first 22 days of trading. Its most popular contracts, the three month Euribor and three month Sterling futures, accounted for the majority of volume -- trading over 59,000 contracts. CBOE, along with several major dealer banks and the London Stock Exchange, are investors in the new venture.
“LSE’s CurveGlobal Trades 60,000 Lots in First Month” – Luke Jeffs, FOW
VIX FIX: Volatile Desert
The current muted level of the CBOE Volatility Index (VIX Index) is bucking the historical trend of elevated volatility around election cycles. Major market indicators continued to operate in a very narrow trading range, with the Dow Jones Industrial Average ending the week virtually unchanged, and the VIX Index still below its historical average of 20, hovering around the 16 level. Most financial professionals feel that election outcomes are already priced into the market, but if volatility is as unpredictable as this campaign season, markets could heat up very fast.
“CBOE VIX Volatility Index Declines 17% This Week as Earnings Season Surprises to the Upside” – Sam Bourgi, Economic Calendar.com
“An Options Contract That’s Not for the Faint of Heart” – Ben Eisen, The Wall Street Journal
“Volatility Update: Will Election Day Bring Conviction to VIX?” – Frederic Ruffy, The Ticker Tape
“Uneasy Calm Grips Markets Suddenly Silent Before U.S. Vote” – Joseph Ciolli and Ye Xie, Bloomberg
“How the VIX Reads S&P 500’s Future” – Joseph Halpern, Think Advisor
“Market Swings: Why Do Some Traders Love Market Volatility?” – The Ticker Tape
“No Signs of Profit Taking in VIX ETFs” – Peter Tchir, Forbes