The Chicago Board Options Exchange (CBOE) today announced that it has filed for Securities and Exchange Commission (SEC) approval to list options based on recently-created volatility indexes that track individual stocks — Apple (AAPL), Amazon (AMZN), Goldman Sachs (GS), Google (GOOG), and IBM (IBM) — using CBOE's widely-followed CBOE Volatility Index (VIX) methodology.
"Stock VIXes," first introduced in January as volatility benchmarks, have allowed investors to track individual stock volatility with a quantifiable measurement for the first time. Pending regulatory approval, investors will have the ability to trade options contracts based on the volatility component of the individual stock.
In addition, CBOE's rule filing would permit the trading of options on the CBOE Crude Oil ETF Volatility Index (OVX), based on United States Oil Fund (USO) options. The CBOE Crude Oil ETF Volatility Index (OVX) has been calculated and disseminated by the CBOE since 2008 and, pending approval, will have a tradable contract tied its benchmark, allowing investors to hedge the risk of volatility in the active oil sector for the first time.
"As the pioneer in the volatility space, CBOE is committed to developing a wide variety of innovative tools that can help investors measure and potentially mitigate, volatility in their portfolios," CBOE Chairman and CEO William J. Brodsky said. "Our benchmark indexes and strategies, combined with our volatility futures and options products, have become broadly recognized and accepted by investors, and these new products will provide even more ways to manage volatility across a variety of asset classes."
In the SEC filing, CBOE requested the ability to list options on up to 40 different volatility benchmarks of individual equities and certain exchange traded funds (ETFs) that could be created by CBOE. The products announced today are the first of those 40 products.
CBOE Futures Exchange (CFE) also plans to list futures contracts on volatility benchmarks that have been approved for options trading, but has not yet filed with the Commodity Futures Trading Commission (CFTC) for approval.