This new family of sector indexes, or PowerPacks, was designed by CBOE to provide investors with a comprehensive set of trading tools to manage the risk of, or gain exposure to, a diversified group of stocks in certain industry groups. Both cash-settled index options and futures on these twelve new indexes will be offered, trading on CBOE and the CBOE Futures Exchange (CFE), respectively.
The twelve individual indexes included in the family of PowerPacks are: CBOE PowerPacks Bank, Biotechnology, Gold, Internet, Iron & Steel, Oil, Oil Services, Pharmaceuticals, Retail, Semiconductor, Technology, and Telecom Indexes.
"We are pleased to introduce this new family of sector indexes, developed to meet the evolving needs of our customers. CBOE has a long tradition of index product innovation, and the launch of these new products highlights our commitment to stay ahead of the curve in this arena. Despite the current challenges to proprietary index options, CBOE remains strongly committed to responding to changing investment needs and opportunities through index product innovation," said CBOE Chairman and CEO William J. Brodsky.
"With the launch of futures and options on a suite of complementary indexes with consistent methodologies, both futures traders and securities traders will have significant trading opportunities that were not previously available," said CFE Managing Director, Patrick Fay. "CBOE is the creator of index options, and the CBOE Futures Exchange is proud to follow in that tradition, from developing the first tradable volatility product--VIX futures, to offering new ways to trade indexes."
The new CBOE PowerPacks employ a consistent, objective methodology for component selection and calculation. Each index is comprised of 25 securities that are among the largest and most actively traded companies in their respective industry groups. Each index is calculated using a "modified" capitalization methodology that limits the weight of individual components to 10% initially, and on subsequent re-balancing dates. The indexes will be re-balanced quarterly, each on the same date.
Futures based on the PowerPacks sector indexes will trade electronically on CFE, via CBOEdirect. The options will trade at CBOE, electronically and via open-outcry, on the CBOE Hybrid Trading System.
The Designated Primary Market Maker (DPM) for futures and options on the CBOE PowerPacks Biotech, Gold, Iron and Steel, and Pharmaceutical Indexes is Jane Street Specialists, LLC. The DPM for futures and options on the CBOE PowerPacks Retail and Telecom Indexes is LaBranche Structured Products, LLC. The DPM for the CBOE PowerPacks Bank, Internet, Oil, Oil Services, Semiconductor and Technology Indexes is Timber Hill LLC.
For details on ticker symbols, expiration cycles, position limits, component stocks and other contract information, please visit http://www.cboe.com/PowerPacks.
CBOE, the world's largest options marketplace and the creator of listed options, is regulated by the SEC. For additional information about the CBOE and its products, access the CBOE website at: http://www.cboe.com/
