The Chicago Board Options Exchange said it plans to expand its volatility-index franchise, aiming to lure more traders to an area where it already leads its competition.
The exchange, part of CBOE Holdings Inc., said in a release Wednesday that it plans to list options on single-stock volatility measures and to extend the franchise to a raft of sector exchange-traded funds. The CBOE Volatility Index, or VIX, is often called the “fear index” and is the most widely followed gauge of investor expectations for stock-market swings.
In addition, the exchange reported a “VIX Network” of exchanges around the world “to promote VIX as the global standard for measuring market volatility.”
“The more people in other markets that learn to trade volatility, the more business we’ll see in our volatility products on CBOE,” CBOE Chairman and Chief Executive William Brodsky said at a conference in Florida.
The single-stock options, if approved by the Securities and Exchange Commission, would allow investors to “trade” the volatility of stocks such as Goldman Sachs Group Inc. or Apple Inc. Options will also be listed for Amazon.com Inc., International Business Machines Corp. and Google Inc. volatility.
The exchange intends a similar product for the United States Oil Fund (USO), the most popular ETF that tracks the price of crude, according to the release, and it announced benchmarks for several other ETFs.
The VIX uses information from the prices of Standard & Poor’s 500 options to measure the market’s best guess of stocks’ future volatility. It shot to fame during the financial crisis as investors sought tools to measure and trade in an anxious and plunging stock market.
CBOE has agreements in place for exchanges in Canada, Hong Kong, Australia, Europe, India and Taiwan to use the VIX methodology.
The moves follow a push by rival Nasdaq OMX Group Inc. to create measures of stocks’ performance against the broader market, another effort to isolate certain characteristics of stocks and trade them.
CBOE’s new ETF volatility benchmarks will also include measures on the iShares MSCI Emerging Markets Index Fund under the ticker VXEEM, the iShares Trust FTSE China 25 Index Fund under VXFXI, the iShares MSCI Brazil Index Fund under VXEWZ, the Market Vectors Gold Miners Fund under VXGDZ, the iShares Silver Trust under VXSLV and the Energy Select Sector SPDR under VXXLE, the release said.
Companies in this article
CBOE Holdings
CBOE Holdings Inc. claims it is the largest option exchange in the United States. The company, in addition to its core options trading business, provides marketplaces for trading futures contracts...
Read more about this company »
