Derived from real-time S&P 500 Index (SPX) option prices, VIX is designed to reflect investors' consensus view of expected stock market volatility over the next 30 days. Some market analysts consider VIX the "investor fear gauge" since during periods of economic uncertainty, investors buy portfolio protection in the form of index options.
"CBOE is again breaking new ground in Index innovation, bringing a new investor tool to the marketplace -- options on the CBOE Volatility Index, or VIX -- the leading investor benchmark of market sentiment and volatility," said CBOE Chairman and Chief Executive Officer, William J. Brodsky. "The launch of VIX and Variance futures on the CBOE Futures Exchange were the first exchange-traded, pure volatility products available, and the launch of VIX options will offer new ways to trade and hedge volatility to a broader audience."
"We are very excited to add VIX options to the unique suite of volatility products brought to market by CBOE," said CBOE Vice Chairman Edward T. Tilly. "Investors will now have the ability to make options trades based purely on their expectations of volatility."
Options on VIX will have a multiplier of $100, and will have contract months of two near-term contract months plus one additional month on the February quarterly cycle. Trading hours will be 8:30 a.m. to 3:15 p.m. (Chicago Time). The options will be European-style exercise, and will be cash settled. For contract specifications, historical prices and charts visit www.cboe.com/VIX.
Group One Trading, L.P. has been named the Designated Primary Market Maker (DPM) in the options.
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/