Derivatives and securities exchange network Cboe Global Markets is expanding its volatility products with the launch of options on Cboe Volatility Index futures, subject to regulatory review.
The new options are expected to begin trading on Cboe Futures Exchange on 14 October.
Cboe currently offers securities-based VIX Index options, which allow investors to manage or gain exposure to broad US equity market volatility. The new options on VIX futures will provide similar utility but are based on front-month VIX futures.
With futures as the underlying asset, these options will be CFTC-regulated, enabling market participants that are restricted from accessing US securities-based options to use this product to express their views on equity market volatility.
Options on VIX futures will be European-style (can only be exercised at expiration) and will physically settle into front-month VIX futures. The new options are expected to complement the existing VIX Index options, providing customers with more choice in expiration dates and enabling more granular hedging strategies. Users of options on VIX futures may be able to hedge those positions using front-month VIX futures and standard VIX Index options.
The new options on VIX futures will be exclusively listed and traded on CFE, joining other prominent volatility products, such as Cboe Volatility Index futures and the planned launches of Cboe S&P 500 Variance futures and Cboe S&P 500 Dispersion Index futures, subject to regulatory review.
