The Chicago Board Options Exchange (CBOE) and The Nasdaq Stock Market, Inc. have signed an agreement for CBOE to calculate and disseminate the CBOE NASDAQ-100 BuyWrite Index (BXN).
The new index is calculated using options on the NASDAQ-100 Index(r) (NDX) – a worldwide benchmark that tracks the performance of some of the largest non-financial companies listed on NASDAQ.
The new CBOE NASDAQ-100 BuyWrite Index (BXN) is a benchmark index that measures the performance of a theoretical portfolio that sells NASDAQ-100 Index (NDX) call options against a portfolio of the stocks included in the NASDAQ-100 Index. A “buy-write,” also called a covered call, generally is considered to be an investment strategy in which an investor buys a stock or a basket of stocks, and also sells (“writes”) call options that correspond to the stock or basket of stocks. This strategy can be used to enhance portfolio returns and reduce volatility.
“We are very pleased to partner with NASDAQ in offering this exciting new product,” said CBOE Chairman and CEO William J. Brodsky. “The NASDAQ-100 Index is one of the most recognized and widely followed indexes in the world, and by joining it with CBOE’s proprietary, buy-write methodology, we have created another tool that will provide portfolio managers and investors of all sizes with an important new benchmark against which to measure the performance of a buy-write strategy or fund.”
John Jacobs, Executive Vice President of NASDAQ Financial Products, said, “The CBOE NASDAQ-100 BuyWrite Index will give investors a strategic opportunity to use a product linked to a portfolio of industry-leading companies. This new benchmark has been developed in response to demand from a wide spectrum of industry interests who have a variety of risk preferences and return requirements.”