CME Group Launches FX Options Volatility Converter Tool

Rhea-AI Summary

CME Group launched a groundbreaking FX Options Vol Converter tool aimed at enhancing trading efficiency for foreign exchange traders. This innovative tool allows users to evaluate CME's listed FX options premiums in over-the-counter terms, facilitating better price monitoring and decision-making. It utilizes extensive price data to create a volatility grid, aligning listed options with OTC standards. The tool is designed to empower traders by providing quick access to key market parameters, improving execution and potential profitability.

Positive

• Introduces the first tool to price listed FX options in OTC terms, enhancing trading efficiency.
• Facilitates informed decision-making with comprehensive price monitoring capabilities.
• Improvements in execution and market opportunity identification for traders.

Negative

• None.

CHICAGO and LONDON, Sept. 9, 2020 /PRNewswire/ -- CME Group, the world's leading and most diverse derivatives marketplace, today announced the launch of a new FX Options Vol Converter tool.  At a time when market participants are looking for efficiencies and ways to lower their cost to trade, this new service is the first-ever tool to price CME Group's listed FX options liquidity in over-the-counter (OTC) terms, helping foreign exchange traders to more easily monitor price relationships, make more informed decisions across markets, and ensure best execution for their trading strategies. 

CME Group's listed markets have the largest central limit order book for FX options. This tool takes the extensive price data that is already functionally equivalent to OTC options, with alignments in style, expiration time, and underlying price convergence and creates a volatility grid by tenor and deltas for comparison purposes. 

"Our new FX Options Vol Converter calculates and converts our listed FX options premiums, fixed strike data, rules, and formats into an OTC-equivalent volatility surface, in OTC standard tenors, deltas, and quote conventions – creating comparable pricing across major options pairs," said Paul Houston, Managing Director, Global Head of FX products at CME Group. "Traders can quickly act upon a market opportunity with a drilldown showing the product code, reference premium price, volatility, delta and futures value to help identify their trading opportunity."

Watch this video to see how the FX Options Vol Converter tool makes it easy for a trader to monitor and potentially act upon CME Group's extensive liquidity in FX options. For more information on the methodology of the tool click here. For more information on CME Group's FX markets, please click here.

As the world's leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) enables clients to trade futures, options, cash and OTC markets, optimize portfolios, and analyze data – empowering market participants worldwide to efficiently manage risk and capture opportunities. CME Group exchanges offer the widest range of global benchmark products across all major asset classes based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals.  The company offers futures and options on futures trading through the CME Globex® platform, fixed income trading via BrokerTec and foreign exchange trading on the EBS platform.  In addition, it operates one of the world's leading central counterparty clearing providers, CME Clearing.  With a range of pre- and post-trade products and services underpinning the entire lifecycle of a trade, CME Group also offers optimization and reconciliation services through TriOptima, and trade processing services through Traiana.

CME Group, the Globe logo, CME, Chicago Mercantile Exchange, Globex, and, E-mini are trademarks of Chicago Mercantile Exchange Inc.  CBOT and Chicago Board of Trade are trademarks of Board of Trade of the City of Chicago, Inc.  NYMEX, New York Mercantile Exchange and ClearPort are trademarks of New York Mercantile Exchange, Inc.  COMEX is a trademark of Commodity Exchange, Inc. BrokerTec, EBS, TriOptima, and Traiana are trademarks of BrokerTec Europe LTD, EBS Group LTD, TriOptima AB, and Traiana, Inc., respectively.  Dow Jones, Dow Jones Industrial Average, S&P 500 and S&P are service and/or trademarks of Dow Jones Trademark Holdings LLC, Standard & Poor's Financial Services LLC and S&P/Dow Jones Indices LLC, as the case may be, and have been licensed for use by Chicago Mercantile Exchange Inc.  All other trademarks are the property of their respective owners.

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SOURCE CME Group

FAQ

What is the FX Options Vol Converter tool launched by CME?

The FX Options Vol Converter is a tool that allows users to price CME's listed FX options in over-the-counter terms, assisting traders in monitoring price relationships and making informed trading decisions.

When was the FX Options Vol Converter launched?

The FX Options Vol Converter was launched on September 9, 2020.

How does the FX Options Vol Converter benefit foreign exchange traders?

It helps forex traders by providing information in OTC equivalent formats, enabling them to analyze volatility across major options pairs for better trade execution.

What advantages does CME Group offer through its FX markets?

CME Group offers the largest central limit order book for FX options, enhancing liquidity and trading opportunities for market participants.

What feature does the FX Options Vol Converter provide to traders?

The tool provides a volatility grid that aligns listed FX options with OTC standards, allowing traders to compare pricing efficiently.