Cboe Global Markets Expands Options Trading Landscape with New VX Options and Robinhood Integration

## Cboe Global Markets Revolutionizes Options Trading with VX Options and Robinhood Integration

Cboe Global Markets, Inc. (CBOE)

, a leading provider of options trading solutions, is making waves in the world of options trading. They recently launched

options on Cboe Volatility Index Futures (VX Options)

, a groundbreaking product that offers more choices for managing equity market volatility exposure and expressing directional views. This comes on the heels of an exciting announcement at the HOOD Summit in Miami, FL, on October 17th:

Robinhood customers can now trade index options

, including Cboe’s flagship

S&P 500 Index (SPX ® ) options

and other prominent indices, on their brokerage platform.

This strategic move expands Robinhood’s trading capabilities while addressing the rising demand for options trading among retail and institutional investors. The Options Clearing Corporation reports that in 2023, total U.S. options volumes surpassed 11 billion contracts, marking the fourth consecutive year of record volumes. This represents a staggering 126% increase since 2019. Through the third quarter of 2024, the average daily volume reached 47 million contracts, signifying an 8% rise compared to the same period in 2023.

The launch of VX Options

further expands Cboe’s ecosystem of tradable volatility products, enabling investors to gain a deeper understanding of the volatility embedded in market pricing.

Understanding Options on Cboe Volatility Index Futures (VX Options)

Options on futures are contracts granting the right, but not the obligation, to either buy (go long) or sell (go short) a specific underlying futures contract at a predetermined price on or before a specific date, known as the expiration date. VX Options, Cboe’s latest offering, are options on VX futures. VX futures are cash-settled futures contracts based on the

Cboe Volatility Index (VIX ® Index)

, traded on the

Cboe Futures Exchange, LLC (CFE)

.

VX Options feature European-style exercise, physical settlement, and PM settlement. Most options on futures expire at the close of the market on their final trading day. The VX futures contract underlying a VX Options contract is the front-month VX futures contract relative to the VX Options contract’s expiration date.

The Value Proposition of Options on Cboe Volatility Index Futures

The introduction of VX Options presents investors with increased optionality. One primary benefit is its ability to provide “mid-curve style” exposure, facilitating a distinctive payout profile compared to existing exchange-traded derivatives. This “mid-curve” exposure allows investors to adopt short-term views on forward volatility movements, leading to increased liquidity. This is because VX Options offer shorter-dated VIX exposure, with the underlying being the front month VX future, generally the most liquid VX future.

In-the-money options are settled into the front-month VIX futures contract, enabling more precise delta management. Moreover, trading data from VX Options will generate valuable insights into the volatility-of-volatility term structure, which quantifies the uncertainty surrounding an asset’s future price volatility. This data enhances risk management efficiency across the entire market.

Cboe: Driving Innovation in the Marketplace

The launch of Options on Cboe Volatility Index Futures underscores Cboe’s commitment to innovation within the VIX ecosystem, specifically in enhancing the diversity and efficiency of trading strategies.

Catherine Clay, Global Head of Derivatives at Cboe

, highlights the significance of this new product offering: “Investors have long utilized VIX options and VIX futures to help hedge and manage volatility exposure, and Cboe is proud to expand our volatility product suite at such a critical time. With its options-on-futures structure, the new Options on VIX Futures will look to meet growing customer demand as Cboe works to provide an efficient and seamless experience to both existing and new CFE market participants. The launch will complement our existing volatility offerings, including the recently launched Cboe S&P 500 Variance futures, and enable more investors with the ability to help manage volatility and risk through the election season and beyond.”

As investors become more sophisticated in utilizing derivative instruments, their demand for products like Options on Cboe Volatility Index Futures will likely continue to rise. To complement its product innovations, Cboe boasts the

Cboe Options Institute

, a leader in options education for over 35 years. The institute provides a vast library of resources, including free online courses, webinars, interactive tutorials, and insights from top market experts and academics. These resources are tailored to help retail traders, from beginners to seasoned investors, enhance their understanding of index options and gain the confidence they need to trade successfully.

The launch of VX Options and the expansion of Robinhood’s trading capabilities are clear indicators of Cboe’s commitment to providing investors with the tools they need to navigate today’s complex and dynamic markets. Cboe’s focus on innovation, coupled with its commitment to education, promises to shape the future of options trading for years to come.

## Cboe Global Markets Revolutionizes Options Trading with VX Options and Robinhood Integration

Cboe Global Markets, Inc. (CBOE)

, a leading provider of options trading solutions, is making waves in the world of options trading. They recently launched

options on Cboe Volatility Index Futures (VX Options)

, a groundbreaking product that offers more choices for managing equity market volatility exposure and expressing directional views. This comes on the heels of an exciting announcement at the HOOD Summit in Miami, FL, on October 17th:

Robinhood customers can now trade index options

, including Cboe’s flagship

S&P 500 Index (SPX ® ) options

and other prominent indices, on their brokerage platform.

This strategic move expands Robinhood’s trading capabilities while addressing the rising demand for options trading among retail and institutional investors. The Options Clearing Corporation reports that in 2023, total U.S. options volumes surpassed 11 billion contracts, marking the fourth consecutive year of record volumes. This represents a staggering 126% increase since 2019. Through the third quarter of 2024, the average daily volume reached 47 million contracts, signifying an 8% rise compared to the same period in 2023.

The launch of VX Options

further expands Cboe’s ecosystem of tradable volatility products, enabling investors to gain a deeper understanding of the volatility embedded in market pricing.

Understanding Options on Cboe Volatility Index Futures (VX Options)

Options on futures are contracts granting the right, but not the obligation, to either buy (go long) or sell (go short) a specific underlying futures contract at a predetermined price on or before a specific date, known as the expiration date. VX Options, Cboe’s latest offering, are options on VX futures. VX futures are cash-settled futures contracts based on the

Cboe Volatility Index (VIX ® Index)

, traded on the

Cboe Futures Exchange, LLC (CFE)

.

VX Options feature European-style exercise, physical settlement, and PM settlement. Most options on futures expire at the close of the market on their final trading day. The VX futures contract underlying a VX Options contract is the front-month VX futures contract relative to the VX Options contract’s expiration date.

The Value Proposition of Options on Cboe Volatility Index Futures

The introduction of VX Options presents investors with increased optionality. One primary benefit is its ability to provide “mid-curve style” exposure, facilitating a distinctive payout profile compared to existing exchange-traded derivatives. This “mid-curve” exposure allows investors to adopt short-term views on forward volatility movements, leading to increased liquidity. This is because VX Options offer shorter-dated VIX exposure, with the underlying being the front month VX future, generally the most liquid VX future.

In-the-money options are settled into the front-month VIX futures contract, enabling more precise delta management. Moreover, trading data from VX Options will generate valuable insights into the volatility-of-volatility term structure, which quantifies the uncertainty surrounding an asset’s future price volatility. This data enhances risk management efficiency across the entire market.

Cboe: Driving Innovation in the Marketplace

The launch of Options on Cboe Volatility Index Futures underscores Cboe’s commitment to innovation within the VIX ecosystem, specifically in enhancing the diversity and efficiency of trading strategies.

Catherine Clay, Global Head of Derivatives at Cboe

, highlights the significance of this new product offering: “Investors have long utilized VIX options and VIX futures to help hedge and manage volatility exposure, and Cboe is proud to expand our volatility product suite at such a critical time. With its options-on-futures structure, the new Options on VIX Futures will look to meet growing customer demand as Cboe works to provide an efficient and seamless experience to both existing and new CFE market participants. The launch will complement our existing volatility offerings, including the recently launched Cboe S&P 500 Variance futures, and enable more investors with the ability to help manage volatility and risk through the election season and beyond.”

As investors become more sophisticated in utilizing derivative instruments, their demand for products like Options on Cboe Volatility Index Futures will likely continue to rise. To complement its product innovations, Cboe boasts the

Cboe Options Institute

, a leader in options education for over 35 years. The institute provides a vast library of resources, including free online courses, webinars, interactive tutorials, and insights from top market experts and academics. These resources are tailored to help retail traders, from beginners to seasoned investors, enhance their understanding of index options and gain the confidence they need to trade successfully.

The launch of VX Options and the expansion of Robinhood’s trading capabilities are clear indicators of Cboe’s commitment to providing investors with the tools they need to navigate today’s complex and dynamic markets. Cboe’s focus on innovation, coupled with its commitment to education, promises to shape the future of options trading for years to come.