Credit Event Binary Options (CEBOs)
Single-name CEBOs and Basket CEBOs offer greater transparency and central clearing and settlement. Single-Name CEBOs are security options that pay a fixed amount-$100,000 per contract-in the case where a credit event on an individual issuer or guarantor of debt securities is declared prior to the option's expiration.
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S&P 500 (SPX) Options
S&P 500® (SPX) options have been key risk management tools for the past quarter century. In 2007, SPX options average daily volume grew to 629,819 contracts (more than $90 billion in notional dollar value), and the year-end open interest was 8.1 million contracts.
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Variance Futures
CBOE S&P 500 3-month Variance Futures and CBOE S&P 500 12-month Variance Futures feature daily mark-to-market in a CFTC-regulated marketplace. CBOE S&P 500 3-month Variance Futures are based on the realized, or historical, variance of the S&P 500 Index. CBOE S&P 500 3-month Variance Futures are quoted in terms of variance points, which are defined as realized variance multiplied by 10,000. One variance point is worth $50. For example, a variance calculation of 0.08335 would have a corresponding price quotation in variance points of 833.50, and a contract size of $41,675.00 (833.50 x $50).
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Options and Futures on the CBOE Volatility Index (VIX)
Since 1993 the CBOE Volatility Index® (VIX®) has been considered by many to be the world's premier barometer of investor sentiment and market volatility. Many investors are intrigued by VIX futures and options because VIX often has a negative correlation to stock indexes, and there is a high volatility of volatility. In the first two months of 2008, average daily volume for VIX options was more than 101,000 contacts.
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CFLEX
CBOE recently introduced CFLEXSM, a new low-cost, internet-based FLEX system that provides investors with:
· The ability to customize key contract terms, like exercise prices, exercise styles and expiration dates
· Virtual elimination of counter-party risk,
· Price discovery in competitive, transparent, auction markets, and
· A secondary market for an opportunity to offset or alter positions before expiration.
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CBOE Index Options
CBOE is one of the world's most diversified securities marketplaces, with options on equities, ETFs, indexes and other securities. The top five most-actively traded index and ETF options at CBOE in 2007 were: S&P 500 Index (SPX), iShares Russell 2000 Index Fund (IWM), Standard & Poor's Depositary Receipts (SPY), PowerShares QQQ Trust (QQQQ) and VIX Options (VIX).
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CBOE Hybrid
By blending CBOE's leading trading floor technology with its state-of-the-art electronic trading platform, CBOE Hybrid® is a composite of the most valuable aspects of screen-based and floor-based trading environments.
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BuyWrite Indexes at CBOE
Studies by the Ibbotson Associates, Callan Associates, and Fund Evaluation Group consulting firms showed that BuyWrite indexes such as the BXM and BXD have had the potential to generate impressive income and risk-adjusted returns with lower volatility.
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Options Prices and Transparency
Voluminous data regarding CBOE options prices is available at the CBOE website's price quote page, index option related spreadsheets, and for purchase from Market Data Express. This industry-leading price data provided by CBOE is helping many options investors make more informed investment decisions.
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CBOE S&P 500 PutWrite Index (PUT)
The award for Most Innovative Index at the 2007 Super Bowl of Indexing Conference was given to the CBOE S&P 500 PutWrite Index (PUT). The PUT Index is a benchmark that measures the performance of a hypothetical portfolio that sells S&P 500 Index put options against collateralized cash reserves. Since mid-1988, the PUT Index has had
better risk-adjusted returns than indexes representing "traditional investments" such as the S&P 500 and 30-year Treasury Bond indexes.2
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1 All options transactions on the Chicago Board Options Exchange (CBOE) and all futures transactions on the CBOE Futures Exchange (CFE) are cleared by the Options Clearing Corporation (OCC). A publication by the Options Clearing Corporation (retrieved in 2008) notes: "...OCC is the first clearinghouse to receive Standard & Poor's (S&P) highest credit rating, 'AAA'. S&P reviewed our operational capabilities and three-tiered backup system of financial safeguards and first awarded us with this esteemed rating in 1993. Since then, S&P has continually presented OCC with this prestigious mark every year. It represents our reliability and competency in the clearance and settlement of listed options. FINANCIAL GUARANTEE OCC's three-tiered backup system guarantees performance for all of the products we clear. This system of safeguards consists of rigorous initial and ongoing membership standards, prudent margin requirements and a substantial clearing fund. The strength of this system helps us to achieve our 'AAA' rating..."
2 Past performance is not a guarantee of future returns. Please read all information (including the risk disclosures) at the PUT Index price charts web page. |