Cboe Expands Volatility Trading Offerings with New VIX Futures Options

Cboe Global Markets, a leading provider of global market infrastructure and tradable products, has announced the launch of new options on Cboe Volatility Index (VIX) futures. The new contracts are expected to begin trading on the Cboe Futures Exchange (CFE) on October 14th, offering investors an additional tool to manage U.S. equity market volatility.

Unlocking Volatility Management for a Wider Audience

Complementing Existing VIX Options

The new options on VIX futures will complement Cboe's existing securities-based VIX index options, which are designed to provide similar risk management and yield enhancement capabilities. The option-on-future structure of the new product could potentially allow more market participants, including those restricted from accessing securities-based options, to trade a VIX options product.

Riding the Wave of Volatility Trading

Cboe's VIX Index options have seen record trading volumes over the past two years, with average daily volumes reaching over 851,000 contracts in 2024, up roughly 60% when compared to 2022. This surge in demand underscores the growing importance of volatility management tools in the current market environment.

Expanding the Volatility Product Suite

"Investors have long utilized VIX options and VIX futures to help hedge and manage volatility exposure, and Cboe is proud to expand our volatility product suite at such a critical time," said Catherine Clay, Global Head of Derivatives at Cboe. The launch of the new options on VIX futures will complement Cboe's existing volatility offerings, including the recently launched Cboe S&P 500 Variance futures, and enable more investors to manage volatility and risk through the election season and beyond.

Regulatory Oversight and Clearing

The new options on VIX futures will be regulated by the Commodity Futures Trading Commission (CFTC) and cleared by The Options Clearing Corporation (OCC), ensuring a robust and transparent trading environment for market participants.

Unique Contract Specifications

The new options on VIX futures will have a European-style exercise, PM settlement, and physically settle into the front-month VIX future. These contract specifications are designed to provide investors with a tailored tool for managing volatility exposure in the U.S. equity markets.

Empowering Investors to Navigate Volatility

The launch of these new options on VIX futures represents a significant expansion of Cboe's volatility product suite, offering investors an additional avenue to hedge and manage their exposure to market fluctuations. As the financial landscape continues to evolve, Cboe's commitment to innovation and the development of sophisticated trading tools will be crucial in empowering investors to navigate the complexities of the modern market.