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- Cboe expands suite of products tied to S&P Dow Jones Indices with new Target Outcome Indexes designed to track 16 options-based investment strategies
- Indexes have been licensed to Innovator Capital Management
Cboe Global Markets, Inc. (Cboe: CBOE | Nasdaq: CBOE), one of the world’s largest exchange holding companies, today announced it has rolled out four series of Cboe S&P 500 Target Outcome Indexes, comprising a family of 16 options-based strategy performance benchmarks designed to target the outcomes of specific investment strategies, and has licensed the indexes to Innovator Capital Management.
The Cboe S&P 500 Target Outcome Indexes were designed in collaboration with S&P Dow Jones Indices and Milliman Financial Risk Management LLC. The new indexes measure the performance of a hypothetical portfolio of S&P 500® FLexible EXchange® (FLEX®) options (SPXSM) designed to provide defined exposures to the S&P 500 Index where the downside protection levels, upside growth potential and outcome period are all pre-determined. FLEX options are customizable contracts that provide investors with the ability to customize key contract terms, including strike prices, exercise styles and expiration dates.
“We’re pleased to introduce this new series of Target Outcome Indexes which build upon Cboe’s legacy of equity index investments and options strategy benchmarks. These indexes provide yet another innovative tool designed to aid investors seeking to achieve a pre-determined level of portfolio returns over a set period of time,” said Bruce Traan, Cboe’s Head of Global Index Services.
Each of the indexes is designed to track the returns of a hypothetical investment that, over one year, either provides a buffer against a percentage of losses due to a decline in the S&P 500, and/or enhances returns up to a capped level when compared with the S&P 500. The capped level of the returns for each of the indexes is determined on each annual roll date, so there is no premium or discount to enter into the hypothetical investment. Cboe will disseminate the index values daily.
“Since its introduction, market participants have sought the S&P 500 as the index of choice for transparency and as a catalyst for innovation in our evolving capital markets,” said Vinit Srivastava, S&P Dow Jones Indices Managing Director for Strategy and ESG Product Management. “Alongside our strong relationship with Cboe, we are pleased to work with Innovator Capital Management and Milliman to introduce indices that provide broader access to target outcomes.”
“We are privileged to play a role in developing these innovative Target Outcome Indexes and in turn provide an efficient way for retail investors, financial advisors and product developers to access structured outcome strategies,” said Adam Schenck, Principal and Managing Director of Milliman Financial Risk Management LLC. “We believe an index-based approach can help establish liquidity and transparency within an otherwise complex and opaque space.”
The strategies for the Target Income Indexes fall into two categories: enhanced growth and buffer protect. Enhanced growth target outcome strategies are generally used throughout most market environments as long-term growth tools, or tactically, in modest bull or range-bound market environments. Buffer protect target outcome strategies are generally used as risk management tools, or tactically in bear or range-bound markets. Both categories of index strategies have capped upside returns, so they would underperform relative to the S&P 500 if the stock market is rallying rapidly.
CBOE S&P 500 3X UP, 1X DOWN ENHANCED GROWTH INDEX SERIES
- SPEG-01 (January)
- SPEG-04 (April)
- SPEG-07 (July)
- SPEG-10 (October)
Designed to produce 3x the upside relative to the S&P 500 (up to a predetermined cap) and 1:1 downside, over the one- year outcome period, at which point the indexes will reset.
CBOE S&P 500 2X UP, 1X DOWN, 10% BUFFER PROTECT INDEX SERIES
- SPEB-01 (January)
- SPEB-04 (April)
- SPEB-07 (July)
- SPEB-10 (October)
Designed to produce 2x the upside relative to the S&P 500 (up to a predetermined cap) and 1:1 downside exposure, with a defined buffer protection level against the first 10% of losses due to a decline in the S&P 500, over the one-year outcome period, at which point the indexes will reset.
CBOE S&P 500 15% BUFFER PROTECT INDEX SERIES
- SPRF-01 (January)
- SPRF-04 (April)
- SPRF-07 (July)
- SPRF-10 (October)
Designed to track the return of the S&P 500 (up to a predetermined cap), with a defined buffer protection level against the first 15% of losses due to a decline in the S&P 500, over the one-year outcome period, at which point the indexes will reset.
CBOE S&P 500 30% (-5% TO -35%) BUFFER PROTECT INDEX SERIES
- SPRS-01 (January)
- SPRS-04 (April)
- SPRS-07 (July)
- SPRS-10 (October)
Designed to track the return of the S&P 500 (up to a predetermined cap), with a defined buffer protection level against a decline in the S&P 500 from -5% to -35%, over the one year outcome period, at which point the indexes will reset.
For additional information about Cboe Global Markets’ wide range of indexes, please see http://www.cboe.com/index/.
The S&P Index(es) (the “Index(es)”) underlying the Target Outcome Indexes and any product provider’s (the “Issuer”) investment products (the “Investment Products”) are proprietary to S&P Dow Jones Indices LLC (“S&P DJI”). S&P® and the names identifying the Index(es) are trademarks of Standard & Poor’s Financial Services LLC and have been licensed for use by S&P DJI and sublicensed for certain purposes by the Issuer. The Issuer’s Investment Products based on the Index(es) are not in any way sponsored, endorsed, sold or promoted by S&P DJI, its affiliates or licensors and those parties make no representations or warranties, express or implied, regarding the advisability of investing in securities generally or in the Investment Products particularly, or the ability of the Index (es) to track general market performance.
