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CBOE To Begin Trading Options On The CBOE Volatility Index (VIX) On Friday, February 24, 2006

Date 21/02/2006

The Chicago Board Options Exchange (CBOE) will launch options on the CBOE Volatility Index, "VIX" (options ticker symbol VIX), on Friday, February 24, 2006, as previously announced. VIX is the widely disseminated benchmark index commonly referred to as the market's "fear gauge," and for the first time, investors will now have the opportunity to trade options on this premier measure of market volatility and investor sentiment. VIX futures (futures ticker symbol VX) have been available on the all-electronic CBOE Futures Exchange (CFE) since 2004.

CBOE created VIX in 1993 as the first measure of volatility in the overall market. Using a formula that measures the prices of options on the benchmark S&P 500 Index (SPX), the VIX serves as a proxy for investor sentiment-rising when investors are anxious or uncertain about the market and falling during times of confidence or complacency. The VIX is widely quoted in the press, and is closely watched by active traders and analysts for insight into the possible future direction of the market. The VIX price is calculated and disseminated by the CBOE every fifteen seconds throughout the trading day.

Options on VIX will now offer investors the ability to make trades based on their view of future direction or movement of the VIX, and option buyers have the advantage of limited risk. VIX options also offer the opportunity to hedge volatility risk of a portfolio, distinct from price risk. CBOE has created a new section of its award-winning website, offering education on VIX trading strategies, historical price data on the VIX going back to 1986, charts, answers to frequently-asked questions, and a free options toolbox, at www.cboe.com/VIXOptions.


VIX options will be cash-settled, European-style exercise, and are based on the value of the CBOE Volatility Index. Initial contract months for the options will be March, April, and May, with strike prices of 10, 12 1/2, 15, 17 1/2 and 20.The last trading day for VIX options will generally be Tuesday of Expiration week. Trading hours will be 8:30 a.m. to 3:15 p.m. (Chicago Time). Group One Trading, L.P. has been named the Designated Primary Market Maker (DPM) in the options.

-In 2005 VIX reached a high of 18.59 on April 18th and a low of 9.88 on July 20th. The average VIX level in 2005 was 12.81.

-Although the value of VIX has been relatively low the past year, the "volatility of volatility" has been high. In 2005 the volatility of daily price changes was 83% for VIX ,compared to only 10% for the S&P 500 Index.

- VIX High and Low Closing Values: 1990-2005

1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
36.47
36.20
20.51
17.30
23.87
15.74
21.99
38.20
45.74
32.98
33.49
43.74
45.08
34.69
21.58
17.74
14.72
13.95
11.51
9.31
9.94
10.36
12.00
17.09
16.23
17.42
16.53
18.76
17.40
15.58
11.23
10.23


CBOE, the world's largest options marketplace and the creator of listed options, is regulated by the Securities and Exchange Commission (SEC). For additional information about the CBOE and its products, visit the CBOE website at: http://www.cboe.com/


CBOE®, VIX®, CBOE Volatility Index®, and Chicago Board Options Exchange® are registered trademarks of Chicago Board Options Exchange, Incorporated. SPX(SM) is a service mark of Chicago Board Options Exchange, Incorporated. S&P® and S&P 500® are registered trademarks of the McGraw-Hill Companies, Inc. and are licensed for use by the Chicago Board Options Exchange, Incorporated pursuant to a License Agreement. CFE(SM) is a service mark of CBOE Futures Exchange, LLC.