In addition, CBOE’s rule filing would permit the trading of options on the CBOE Crude Oil ETF Volatility Index (OVX), based on US Oil Fund (USO) options.
CBOE said that the ‘Stock VIXes’, first introduced in January as volatility benchmarks, have allowed investors to track individual stock volatility with a quantifiable measurement.
Since 2008, the CBOE Crude Oil ETF Volatility Index (OVX) has been calculated and disseminated by the CBOE 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.
Pending regulatory approval, investors will have the ability to trade options contracts based on the volatility component of the individual stock.
CBOE said in its SEC filing, it requested for 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 exchange. The products will be 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.
CBOE chairman and CEO William Brodsky said that the benchmark indexes and strategies, combined with the 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.
