Cboe to Launch New Cboe S&P 500 Variance Futures on Monday, September 23
Cboe Global Markets (CBOE) plans to launch Cboe S&P 500 Variance Futures on September 23, 2024, on the Cboe Futures Exchange. This new product aims to provide market participants with a tool to calculate implied volatility of the U.S. equity market and manage volatility risks. The futures offer a streamlined approach to trading the spread between implied and realized volatility, enabling traders to capitalize on market discrepancies.
The launch comes at a critical time amid uncertain macroeconomic conditions, including the upcoming U.S. election and geopolitical tensions. Cboe expects these futures to appeal to a wide range of market participants, including volatility traders, hedge funds, institutional investors, and portfolio managers. The product is designed to be capital-efficient and transparent, offering an accessible way to replicate OTC variance swap exposures in a centrally cleared environment.
Cboe Global Markets (CBOE) prevede di lanciare I futures sulla varianza Cboe S&P 500 il 23 settembre 2024, presso il Cboe Futures Exchange. Questo nuovo prodotto ha l'obiettivo di fornire agli operatori di mercato uno strumento per calcolare la volatilità implicita del mercato azionario statunitense e gestire i rischi di volatilità. I futures offrono un approccio semplificato per negoziare lo spread tra la volatilità implicita e quella realizzata, consentendo ai trader di sfruttare le discrepanze di mercato.
Il lancio avviene in un momento cruciale, in mezzo a incertezze macroeconomiche, inclusi le prossime elezioni negli Stati Uniti e le tensioni geopolitiche. Cboe si aspetta che questi futures attirino un'ampia gamma di operatori di mercato, tra cui trader di volatilità, fondi hedge, investitori istituzionali e gestori di portafoglio. Il prodotto è progettato per essere efficientemente capitale e trasparente, offrendo un modo accessibile per replicare le esposizioni nei contratti swap di varianza OTC in un ambiente centralmente compensato.
Cboe Global Markets (CBOE) tiene planes de lanzar Futuros de Varianza Cboe S&P 500 el 23 de septiembre de 2024, en el Cboe Futures Exchange. Este nuevo producto tiene como objetivo proporcionar a los participantes del mercado una herramienta para calcular la volatilidad implícita del mercado de acciones de EE. UU. y gestionar los riesgos de volatilidad. Los futuros ofrecen un enfoque simplificado para negociar la diferencia entre la volatilidad implícita y la realizada, permitiendo a los traders aprovechar las discrepancias del mercado.
El lanzamiento llega en un momento crítico en medio de condiciones macroeconómicas inciertas, incluyendo las próximas elecciones en EE. UU. y tensiones geopolíticas. Cboe espera que estos futuros atraigan a una amplia gama de participantes del mercado, incluidos traders de volatilidad, fondos de cobertura, inversores institucionales y gestores de fondos. El producto está diseñado para ser eficiente en capital y transparente, ofreciendo una manera accesible de replicar exposiciones de swaps de varianza OTC en un entorno centralmente compensado.
Cboe 글로벌 마켓(CBOE)은 2024년 9월 23일 Cboe S&P 500 변동성 선물을 Cboe Futures Exchange에서 출시할 계획입니다. 이 새로운 상품은 시장 참여자들에게 미국 주식 시장의 암시적 변동성을 계산하고 변동성 위험을 관리하는 도구를 제공하는 것을 목표로 하고 있습니다. 이 선물은 암시적 및 실제 변동성 간의 스프레드를 거래하는 간편한 접근 방식을 제공하여 거래자들이 시장의 불일치를 활용할 수 있게 해줍니다.
출시는 불확실한 거시경제 조건 속에서 중요한 시점에 이루어지며, 여기에는 다가오는 미국 선거와 지정학적 긴장이 포함됩니다. Cboe는 이러한 선물이 변동성 거래자, 헤지 펀드, 기관 투자자 및 포트폴리오 관리자 등 다양한 시장 참여자들에게 매력적일 것으로 기대하고 있습니다. 이 제품은 자본 효율적이고 투명한 방식으로 설계되어 있어, 중앙에서 청산되는 환경에서 OTC 변동성 스왑 노출을 복제하는 접근 방식을 제공합니다.
Cboe Global Markets (CBOE) prévoit de lancer les Futures de Variance Cboe S&P 500 le 23 septembre 2024, sur le Cboe Futures Exchange. Ce nouveau produit a pour objectif de fournir aux participants du marché un outil pour calculer la volatilité implicite du marché boursier américain et de gérer les risques de volatilité. Les futures offrent une approche simplifiée pour négocier l'écart entre la volatilité implicite et réalisée, permettant aux traders de tirer parti des divergences du marché.
Le lancement intervient à un moment critique dans un contexte macroéconomique incertain, notamment avec les prochaines élections américaines et les tensions géopolitiques. Cboe s'attend à ce que ces futures attirent un large éventail de participants au marché, y compris des traders de volatilité, des fonds spéculatifs, des investisseurs institutionnels et des gestionnaires de portefeuilles. Le produit est conçu pour être efficace en capital et transparent, offrant un moyen accessible de reproduire les expositions aux swaps de variance OTC dans un environnement de compensation centralisée.
Cboe Global Markets (CBOE) plant, am 23. September 2024 Cboe S&P 500 Varianz-Futures an der Cboe Futures Exchange einzuführen. Dieses neue Produkt zielt darauf ab, den Marktteilnehmern ein Werkzeug zur Verfügung zu stellen, um die implizite Volatilität des US-Aktienmarktes zu berechnen und Volatilitätsrisiken zu managen. Die Futures bieten einen vereinfachten Ansatz zum Handel mit der Spreizung zwischen impliziter und realisierter Volatilität, wodurch Händler von Marktunterschieden profitieren können.
Der Launch erfolgt zu einem kritischen Zeitpunkt inmitten unsicherer makroökonomischer Bedingungen, einschließlich der bevorstehenden US-Wahlen und geopolitischer Spannungen. Cboe erwartet, dass diese Futures eine breite Palette von Marktteilnehmern ansprechen, darunter Volatilitäts-Händler, Hedgefonds, institutionelle Investoren und Portfoliomanager. Das Produkt wurde so konzipiert, dass es kapitaleffizient und transparent ist und einen zugänglichen Weg bietet, OTC-Varianz-Swap-Engagements in einer zentralen Clearing-Umgebung zu replizieren.
- Introduction of a new product (Cboe S&P 500 Variance Futures) to expand Cboe's volatility product suite
- Potential to attract a wide range of market participants, potentially increasing trading volume and revenue
- Offers a capital-efficient and transparent alternative to OTC variance swaps
- Aligns with growing demand for hedging and income generation tools in uncertain market conditions
- Planned launch of options on VIX Futures in October, further expanding product offerings
- Success of the new product depends on market adoption and liquidity, which is uncertain
- Regulatory review pending for options on VIX Futures, potentially delaying launch
Insights
The launch of Cboe S&P 500 Variance Futures represents a significant development in the derivatives market. This new product offers a more accessible and capital-efficient alternative to OTC variance swaps, potentially broadening market participation. The timing is strategic, coinciding with heightened market uncertainty due to the upcoming U.S. election and geopolitical tensions.
Key benefits include:
- Enhanced tail risk protection for portfolios
- Improved liquidity in volatility trading
- Simplified approach to trading implied vs. realized volatility spreads
However, investors should be aware that variance futures have a convex payoff structure, which can amplify gains or losses compared to linear volatility products. This feature may attract sophisticated traders but could pose risks for less experienced participants.
The introduction of Cboe S&P 500 Variance Futures is a timely response to the current market environment. With ongoing macroeconomic uncertainties, there's increased demand for sophisticated hedging tools. This product could attract a diverse set of market participants, from volatility traders to institutional investors managing equity risk.
The potential market impact includes:
- Increased trading activity in volatility-based products
- Possible reduction in bid-ask spreads for volatility instruments
- Enhanced price discovery in the volatility space
However, it's important to monitor how this new product affects overall market dynamics, particularly during periods of stress. The success of these futures will largely depend on the liquidity and adoption rate among key market players.
The Cboe S&P 500 Variance Futures offer a new dimension to risk management strategies. By providing a standardized, exchange-traded product for variance exposure, Cboe is addressing a gap in the market. This could lead to more efficient pricing of volatility risk and potentially reduce systemic risk associated with OTC derivatives.
Key considerations for risk managers:
- Improved transparency in variance trading
- Potential for more accurate volatility forecasting
- Enhanced ability to tailor risk exposures
However, the complexity of variance as a concept may present educational challenges for some market participants. It's important for risk managers to thoroughly understand the product's behavior under various market conditions to avoid unintended exposures.
- New exchange-traded solution designed to hedge against and capitalize on
U.S. equity market volatility moves - Product debuts at a critical time as market participants navigate uncertain macro environment
- Reflects Cboe's ongoing efforts to expand access and functionality of its volatility product suite
As investors continue to navigate an uncertain macroeconomic environment, the new Cboe S&P 500 Variance Futures will aim to provide market participants with an additional tool to calculate implied volatility of the
"Cboe's suite of proprietary products, including the highly popular SPX options and VIX options and futures, has served the needs of market participants globally for many decades," said Catherine Clay, Head of Global Derivatives at Cboe. "As investor needs for hedging, trading, diversification and asset allocation continue to evolve, we are committed to expanding our offerings to meet their demands. We look forward to launching the next generation of volatility products – including Cboe S&P 500 Variance Futures and options on VIX futures coming later in October, subject to regulatory review – which we expect will further equip our customers with new and efficient tools to trade volatility."
"The launch of Cboe S&P 500 Variance Futures comes at a crucial time when risk management is top of mind for many market participants, amid the backdrop of the upcoming
Cboe S&P 500 Variance Futures are expected to appeal to a wide range of market participants with diverse investment objectives, including volatility traders and hedge funds seeking capital efficiency and transparency, institutional investors managing equity volatility risk and expressing directional views, portfolio managers aiming for enhanced diversification and risk premia capture, and dealers and market makers transitioning from OTC variance swaps to standardized products.
Noel Smith, Managing Partner and Chief Investment Officer at Convex Asset Management, said: "The introduction of Cboe S&P 500 Variance Futures will be a useful and welcome addition to the volatility toolkit. Variance futures have a convex payoff structure compared to a linear payout with volatility. If long variance, holders might enjoy the benefits of enhanced tail convexity, and if there are liquidity issues at distant out-of-the-money strikes, long variance could continue to mitigate risk. Variance futures fill a useful gap in dispersion trading, tail hedging and relative value volatility arbitrage."
Keith DeCarlucci, Chief Investment Officer at Melqart Asset Management, said: "Having traded variance since 2002, being able to trade a simple cleared variance product will be a very welcome addition to our portfolio."
Bill Looney, Head of Global Business Development at X-Change Financial Access (XFA), said: "XFA is encouraged by the relaunch of the Cboe S&P 500 Variance Futures contract and its ability to provide the marketplace a listed alternative for trading variance. As a committed TPH holder, XFA, with its trading floor and electronic execution capabilities, looks forward to helping our clients – in all customer segments – access this innovative product."
The Cboe S&P 500 Variance Futures contracts will settle based on a calculation[1] of the annualized realized variance of the S&P 500 Index. The realized variance will be calculated once each day from a series of values of the S&P 500 Index beginning with the closing index value on the first day a VA futures contract is listed for trading and ending with the special opening quotation (SOQ) of the S&P 500 Index on the final settlement date of that contract.
The contracts will quote and trade directly in variance units, offering a simplified approach to managing and trading variance exposure. With a contract size of
Additionally, Cboe expects to introduce trading in options on VIX Futures starting October 14, subject to regulatory review. The planned launch of these products underscores Cboe's ongoing efforts to expand the accessibility and functionality of its SPX and VIX product suite to meet growing customer demand. For more information about Cboe S&P 500 Variance Futures and product use cases, please visit the product page here.
About Cboe Global Markets
Cboe Global Markets (Cboe: CBOE), the world's leading derivatives and securities exchange network, delivers cutting-edge trading, clearing and investment solutions to people around the world. Cboe provides trading solutions and products in multiple asset classes, including equities, derivatives, FX, and digital assets, across
Cboe Media Contacts | Cboe Analyst Contact | ||||
Angela Tu | Tim Cave | Kenneth Hill, CFA | |||
+1-646-856-8734 | +44 (0) 7593-506-719 | +1-312-786-7559 | |||
CBOE-C
CBOE-OE
Cboe®, CFE®, Cboe Futures Exchange®, VIX®, and Cboe Global Markets® are registered trademarks of Cboe Exchange, Inc. All other trademarks and service marks are the property of their respective owners. The S&P 500 Index is a product of S&P Dow Jones Indices LLC ("S&P DJI"), and the S&P 500 Index has been licensed to Cboe Exchange, Inc. for the purposes of creating the Cboe S&P 500 Variance Indicator. "Variance Indicator" means a series over time of realized or implied variance values, which series uses as input for its calculation, among other values, one or more of the following values: the value of one or more Standardized Options Contracts based on an Underlying S&P Index, the value of another financial interest based on an Underlying S&P Index, or the value of an Underlying S&P Index. S&P®, S&P 500®, SPX®, DSPX®, DSPBX, US 500 and The 500 are trademarks of S&P DJI or its affiliates, and have been licensed by Cboe Exchange, Inc. for certain purposes. Cboe S&P 500 Variance Futures settling into the Cboe S&P 500 Variance Indicator are not issued, marketed, sponsored or promoted by S&P Dow Jones Indices or its affiliates, and S&P DJI will have no liability with respect thereto.
Trading in futures and options on futures is not suitable for all market participants and involves the risk of loss, which can be substantial and can exceed the amount of money deposited for a futures or options on futures position. You should, therefore, carefully consider whether trading in futures and options on futures is suitable for you in light of your circumstances and financial resources. You should put at risk only funds that you can afford to lose without affecting your lifestyle. For additional information regarding the risks associated with trading futures and options on futures and with trading security futures, see respectively the Risk Disclosure Statement Referenced in CFTC Letter 16-82 and the Risk Disclosure Statement for Security Futures Contracts. Certain risks associated with options, futures, and options on futures and certain disclosures relating to information provided regarding these products are also highlighted at https://www.cboe.com/us.
Cboe Global Markets, Inc. and its affiliates do not recommend or make any representation as to possible benefits from any securities, futures or investments, or third-party products or services. Cboe Global Markets, Inc. is not affiliated with S&P, Convex Asset Management, Melqart Asset Management or X-Change Financial Access (XFA). Investors should undertake their own due diligence regarding their securities, futures, and investment practices. This press release speaks only as of this date. Cboe Global Markets, Inc. disclaims any duty to update the information herein.
Nothing in this announcement should be considered a solicitation to buy or an offer to sell any securities or futures in any jurisdiction where the offer or solicitation would be unlawful under the laws of such jurisdiction. Nothing contained in this communication constitutes tax, legal or investment advice. Investors must consult their tax adviser or legal counsel for advice and information concerning their particular situation.
Cboe Global Markets, Inc. and its affiliates make no warranty, expressed or implied, including, without limitation, any warranties as of merchantability, fitness for a particular purpose, accuracy, completeness or timeliness, the results to be obtained by recipients of the products and services described herein, or as to the ability of the indices referenced in this press release to track the performance of their respective securities, generally, or the performance of the indices referenced in this press release or any subset of their respective securities, and shall not in any way be liable for any inaccuracies, errors. Cboe Global Markets, Inc. and its affiliates have not calculated, composed or determined the constituents or weightings of the securities that comprise the third-party indices referenced in this press release and shall not in any way be liable for any inaccuracies or errors in any of the indices referenced in this press release.
Cautionary Statements Regarding Forward-Looking Information
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve a number of risks and uncertainties. You can identify these statements by forward-looking words such as "may," "might," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," and the negative of these terms and other comparable terminology. All statements that reflect our expectations, assumptions or projections about the future other than statements of historical fact are forward-looking statements. These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from those expressed or implied by the forward-looking statements.
We operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
Some factors that could cause actual results to differ include: the loss of our right to exclusively list and trade certain index options and futures products; economic, political and market conditions; compliance with legal and regulatory obligations; price competition and consolidation in our industry; decreases in trading or clearing volumes, market data fees or a shift in the mix of products traded on our exchanges; legislative or regulatory changes or changes in tax regimes; our ability to protect our systems and communication networks from security vulnerabilities and breaches; our ability to attract and retain skilled management and other personnel; increasing competition by foreign and domestic entities; our dependence on and exposure to risk from third parties; global expansion of operations; factors that impact the quality and integrity of our and other applicable indices; our ability to manage our growth and strategic acquisitions or alliances effectively; our ability to operate our business without violating the intellectual property rights of others and the costs associated with protecting our intellectual property rights; our ability to minimize the risks, including our credit, counterparty, investment, and default risks, associated with operating a European clearinghouse; our ability to accommodate trading and clearing volume and transaction traffic, including significant increases, without failure or degradation of performance of our systems; misconduct by those who use our markets or our products or for whom we clear transactions; challenges to our use of open source software code; our ability to meet our compliance obligations, including managing potential conflicts between our regulatory responsibilities and our for-profit status; our ability to maintain BIDS Trading as an independently managed and operated trading venue, separate from and not integrated with our registered national securities exchanges; damage to our reputation; the ability of our compliance and risk management methods to effectively monitor and manage our risks; restrictions imposed by our debt obligations and our ability to make payments on or refinance our debt obligations; our ability to maintain an investment grade credit rating; impairment of our goodwill, long-lived assets, investments or intangible assets; the impacts of pandemics; the accuracy of our estimates and expectations; litigation risks and other liabilities; and risks relating to digital assets, including winding down the Cboe Digital spot market and transitioning digital asset futures contracts to CFE, operating a digital assets futures clearinghouse, cybercrime, changes in digital asset regulation, and fluctuations in digital asset prices. More detailed information about factors that may affect our actual results to differ may be found in our filings with the SEC, including in our Annual Report on Form 10-K for the year ended December 31, 2023 and other filings made from time to time with the SEC.
We do not undertake, and we expressly disclaim, any duty to update any forward-looking statement whether as a result of new information, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.
1 For more information on the calculation of the final settlement value, please refer to the Product Specifications for Cboe S&P 500 Variance Futures on Cboe's website here.
2 Multiplied by the futures price
View original content to download multimedia:https://www.prnewswire.com/news-releases/cboe-to-launch-new-cboe-sp-500-variance-futures-on-monday-september-23-302245233.html
SOURCE Cboe Global Markets, Inc.
FAQ
When will Cboe launch the S&P 500 Variance Futures (CBOE)?
What is the purpose of Cboe's new S&P 500 Variance Futures (CBOE)?
How will Cboe S&P 500 Variance Futures (CBOE) be settled?
What is the contract size for Cboe S&P 500 Variance Futures (CBOE)?
