"CFE is responding to customer demand for new and innovative tools to manage risk and expand investment opportunities," said CBOE Chairman and CEO William J. Brodsky. "There is tremendous value in having a means to hedge and trade volatility, and this new suite of exchange-traded volatility products will have a dramatic impact on the financial landscape of the future."
"CFE is pleased to provide exchange-traded S&P 500 variance products that offer the advantages of transparency, standardized terms, and the backing of a triple-A rated clearing house," said CFE Managing Director Patrick Fay. "CBOE has a long tradition of product innovation, including the creation of the first Volatility Index, making CBOE Futures Exchange the natural home for volatility and variance products."
The CFE Variance Futures will be traded electronically, via CBOEdirect, and will be cleared at the triple-A rated Options Clearing Corporation (OCC).
Based on the realized variance of the S&P 500 Index, CFE's Variance Futures will expand the opportunities now available to trade this new asset class. Variance Futures, such as VO and VT, along with the recently announced futures on VIX, provide a practical, direct means to trade the volatility of the broad market and to hedge volatility risk of broad-based portfolios.
Trading hours for Variance Futures will be 8:30 a.m. to 3:15 p.m. CST (Chicago time). The contracts will be cash settled, for a value based on a standardized calculation of the realized variance of the S&P 500 Index. For contract specifications and more information, please visit the CBOE website at http://www.cboe.com/CFE.
The newly formed CBOE Futures Exchange is a wholly owned subsidiary of the Chicago Board Options Exchange, Incorporated and is the newest futures exchange in the world. Regulated by the Commodity Futures Trading Commission (CFTC), the exchange is expected to begin trading on March 26, 2004, pending final regulatory approval, initially offering futures on VIX (symbol VX).
CBOE, regulated by the Securities and Exchange Commission (SEC), is the creator of listed options, and the world's largest options marketplace. For additional information about the CBOE and its products, access the CBOE website at http://www.cboe.com/.
