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Cboe Global Markets, Inc. (Cboe: CBOE), the world's leading derivatives and securities exchange network, today announced it has launched for trading S&P 500 Equal Weight Index (EWI) options. The new options are the latest addition to Cboe's S&P 500 toolkit and provide investors additional choice and diversification opportunity through broad-based U.S. equity market exposure.
The S&P 500 EWI (Bloomberg index ticker: SPW) is the equal-weight version of the S&P 500 Index, with each constituent of the S&P 500 EWI allocated a fixed weight of 0.2% of the index total at each quarterly rebalance. While including the same constituents, the S&P 500 EWI and the capitalization-weighted S&P 500 Index often differ in sector and factor exposures including smaller-cap vs. mega-cap stocks, momentum bias, and realized volatility.
The S&P 500 EWI options are designed to provide different exposure and complement Cboe's S&P 500 Index (SPX) options, which are one of the most actively traded and liquid options in the world. Market participants will be able to utilize the S&P 500 EWI options to make directional trades based on their views of macro trends and shifts in equity market dynamics and for additional hedging and income-generating opportunities.
"As investors turn to options at record levels to help manage U.S. equity market exposure and volatility, we are pleased to expand our S&P product suite with the launch of S&P Equal Weight Index options," said Catherine Clay, Global Head of Derivatives at Cboe. "We expect these options to cater to both retail and institutional investors looking to diversify and implement a variety of trading strategies, ultimately providing them greater choice and ability to tailor their exposure to fit their needs. Investors are increasingly seeking to gain more balanced exposure across the market, and with the indexing expertise of S&P Dow Jones Indices and demand for the capitalization-weighted SPX options, the S&P 500 Equal Weight Index is ideally suited to underlie these new options."
Megan Morgan, Head of Market Structure at Belvedere Trading, said: "The addition of S&P 500 Equal Weight Index options by Cboe is timely and we are excited for the opportunity to serve as the Lead Market-Maker. We have long found value in the S&P 500 Index ecosystem and Cboe's trading floor, and as the market evolves, more tools in the toolkit are always welcomed."
Danny Kirsch, Head of Options Trading and Strategy at Piper Sandler, said: "The performance of the S&P 500 Index relative to the S&P 500 Equal Weight Index has been a key topic in conversations around equity index exposure in recent years. By adding options on the S&P 500 EWI Index, Cboe is now allowing customers more ways to hedge risks and manage portfolios."
The S&P 500 EWI options are based on 1/10th the value of the S&P 500 EWI (options ticker: SPEQX). With a standard contract multiplier of $100, the notional value of an S&P 500 EWI options contract would be approximately $63,200 as of market close on April 7. The mid-sized notional value potentially allows for a wider range of market participants to access the options. Similar to Cboe's other proprietary index options, S&P 500 EWI options are cash-settled and will have European-style exercise. Cash settlement eliminates concerns over physical delivery as profits and losses are settled as a debit or credit at expiration, and the European-style expiration removes the risk of early assignment and provides more certainty when implementing hedging strategies.
On April 14, Cboe listed standard monthly options expiring on the third Friday. SPEQX options are available to trade during regular trading hours (RTH) between 9:30 a.m. ET and 4:15 p.m. ET. FLEX options are offered on SPEQX. Cboe plans to list PM-settled weekly options at a later date, pending regulatory approval. To learn more about the launch of the S&P 500 EWI options including additional contract specifications, visit here.
