Cboe Announces Upcoming Launch of Options on VIX Futures, Expanding Its Volatility Product Suite

Date – 07-Aug-2024

Cboe Global Markets, the leading derivatives and securities exchange network, has announced plans to introduce options on Cboe Volatility Index (VIX) futures, with trading expected to commence on October 14, pending regulatory approval. These new options on VIX futures (VX) will be offered on the Cboe Futures Exchange, LLC (CFE), providing market participants with an additional tool for managing volatility.

Currently, Cboe offers VIX Index options, which allow investors to hedge or gain exposure to U.S. equity market volatility. The new options will serve a similar purpose but will be based on front-month VIX futures, falling under CFTC regulation. This structure will enable a broader range of market participants, including those restricted from accessing U.S. securities-based options, to manage their exposure to market volatility.

Rob Hocking, Head of Product Innovation at Cboe, highlighted the significance of expanding the VIX complex, particularly given the increased demand for hedging tools and the upcoming U.S. election, which typically drives market volatility. The introduction of these options is expected to complement Cboe’s existing offerings, including the planned relaunch of variance futures in late September.

Catherine Clay, Head of Global Derivatives at Cboe, emphasized that the new options will appeal to a diverse group of users, including Commodity Trading Advisors and customers of Futures Commission Merchants. By listing these options on CFE, participants can trade them using the same connections and memberships already established for VIX futures, enhancing accessibility.

These European-style options, which can only be exercised at expiration, will physically settle into front-month VIX futures, offering more choices in expiration dates and allowing for more precise hedging strategies. They will be exclusively traded on CFE, alongside other prominent volatility products, such as VIX futures and the anticipated Cboe S&P 500 Variance (VA) and Dispersion Index (DSPX) futures.