CBOE Options on the S&P 500® Annual Dividend Index (DIVD) and the S&P 500 Dividend Index (DVS)
Beginning May 25, 2010, CBOE plans to offer two different ways to trade S&P 500 Index dividends:
- S&P 500 (Quarterly) Dividend Index options (Ticker: DVS) are based on ten (10) times the level of the S&P 500 (Quarterly) Dividend Index.
- S&P 500 Annual Dividend Index options (Ticker: DIVD) are based on the level of the S&P 500 Annual Dividend Index.
Both S&P 500 Dividend Indexes reflect ordinary cash dividends paid by the companies in the S&P 500 Index (SPXTM). Options on these indexes are cash-settled and European-style contracts.
Contract Specifications for CBOE Options on the DIVD Index
Contract Specifications for CBOE Options on the DVS Index
DIVD Press Release - May. 13, 2010
DVS Press Release - Feb. 17, 2010
DVS Press Release - Dec. 11, 2009
Frequently Asked Questions(FAQ) - Introducing S&P Dividend Options
DVS Quick Reference Guide Brochure
DIVD Quick Reference Guide Brochure
Overview of the S&P 500 Dividend Indexes
The S&P 500 (Quarterly) Dividend and S&P 500 Annual Dividend Indexes are both measures of the ordinary cash dividends paid by corporations comprising the S&P 500 Index, accumulated over different "accrual" periods.
The accrual period for the S&P 500 Quarterly Dividend Index runs from the business day after the third Friday of a quarterly expiration month (i.e.; March, June, September or December) through the third Friday of the next quarterly expiration month.
The accrual period for the S&P 500 Annual Dividend Index runs from the business day after the third Friday in December through the third Friday of December in the following year.
The S&P 500 Dividend Indexes are expressed in S&P 500 Index points and are reset to zero following the end of each period. As shown in the following charts, this reset feature results in a distinctive "sawtooth" pattern quite unlike historical prices for traditional stock indexes.
Ticker symbols include:
|S&P 500 Annual Dividend Index (DIVD)
||S&P 500 (Quarterly) Dividend Index (DVS)
- SPXDIVAN on Bloomberg
- .SPXDIVAN on Reuters
- (DIVD is the ticker symbol for the underlying DIVD options.)
- SPXDIV on Bloomberg
- .SPXDIV on Reuters
- (DVS is the ticker symbol for the underlying DVS options.)
Indicative Values: S&P 500 Annual Dividend Index Options reflect the total dividends expected over an entire annual accrual period. CBOE disseminates a series of "Indicative Values" derived from S&P 500 Index Option prices that provide estimates of forward expected dividends. These values are intended for informational purposes only.
- Implied Forward DIVD Indicator - 2010 - DVANA
- Implied Forward DIVD Indicator - 2011 - DVANB
Dividend Index Options at CBOE
S&P 500 Dividend Index Options allow investors to capture the difference between implied dividends, the market's best guess of future dividend payments over a certain period, and realized dividends - the dividends that actually are paid over that period.
- Portfolio managers can use DVS and DIVD options to hedge against potential declines in dividend income from long positions in U.S. equities, which can be significant over long holding periods.
- S&P 500 Index derivatives traders can use DVS and DIVD Options to hedge the dividend risk implicit in options and futures prices. Issuers of total-return index-linked structured products can use DVS and DIVD options to hedge the dividend exposure in their offerings.
- DVS and DIVD Index Options may be used to execute dividend arbitrage strategies.
- Investors may be able to use DVS and DIVD options to trade their views of economic recovery or continued recession, changes in the dividend policies of U.S. companies, or an expectation of future inflation.
- Investors can use DVS and DIVD options to trade forward implied dividends, which might offer a compelling alternative to basic equity exposure.
For more details on use of DVS and DIVD options:
Frequently Asked Questions (FAQ) - Introducing S&P Dividend Options
Options involve risk and are not suitable for all investors. Prior to buying or selling options, a person must receive a copy of Characteristics and Risks of Standardized Options (ODD). Copies of the ODD are available from your broker, by calling 1-888-OPTIONS, or from The Options Clearing Corporation, One North Wacker Drive, Suite 500, Chicago, Illinois 60606. The information in these materials is provided solely for general education and information purposes and therefore should not be considered complete, precise, or current. Many of the matters discussed are subject to detailed rules, regulations, and statutory provisions which should be referred to for additional detail and are subject to changes that may not be reflected in these materials. No statement within these materials should be construed as a recommendation to buy or sell a security or to provide investment advice. Any strategies discussed, including examples, do not include commissions, dividends, margin, taxes, and other transaction costs. However, these costs will affect the outcome of transactions and should be considered.
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