The CBOE Futures Exchange plans to introduce trading in its first options on a futures contract – Weekly options on VIX futures – on 28 September, subject to regulatory approval.
All key pieces of the VIX product suite will now be available on CBOE’s electronic technology platform, CBOEdirect: cash-settled CBOE Volatility Index options, VIX futures, options on volatility-related exchange traded notes and, later this month, Weekly options on VIX futures.
"The addition of Weekly options on VIX futures, which incorporates a version of the popular ‘Weeklys’ expirations on security options, brings an added dimension to CBOE’s suite of volatility products. It also underscores our ability to seamlessly support multiple products and their unique specifications on a single platform," says CBOE president and chief operating officer Edward Joyce. "We’ve taken the best features of Weeklys expirations, further refined them for use with options on VIX futures, and created another way for customers to manage volatility."
"We expect that Weekly options on VIX futures will attract sophisticated investors, traders and institutions that are looking for more ways to construct unique exposures to volatility over a shorter timeframe," says CBOE Futures Exchange managing director Andrew Lowenthal. "We see the contract being used in a number of ways – as a shorter-term play on implied volatility that’s independent of the direction and level of stock prices, to hedge equity returns and to diversify portfolios."
CBOE Futures Exchange, launched in 2004, currently offers futures on four contracts: the CBOE Volatility Index, CBOE mini-VIX, CBOE S&P 500 3-Month Variance and CBOE S&P 500 12-Month Variance.