CBOE To Trade Options On Volatility Index

The Chicago Board Options Exchange (CBOE) will launch options on the CBOE Volatility Index, "VIX" (options ticker symbol VIX), on Friday, February 24, 2006. VIX futures (futures ticker symbol VX) have been available on the all electronic CBOE Futures Exchange

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The Chicago Board Options Exchange (CBOE) will launch options on the CBOE Volatility Index, “VIX” (options ticker symbol VIX), on Friday, February 24, 2006. 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 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.

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).

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