IX Futures at 2 A.M. Finally a Reality as CBOE Extends
Investors who want to turn on their
computers at 2 a.m. to trade volatility futures that have lost
value this year are now free to do so.
CBOE Holdings Inc. yesterday extended trading hours on Chicago Board Options Exchange Volatility Index futures, making them available almost around the clock. The VIX (VIX), used by people to protect stock holdings from losses or speculate on market swings, has dropped 21 percent this year to 10.85, less than two points from a record low.
While CBOE is hoping more hours will bring business from Europe and Asia, it will also attract U.S. traders in the middle of the night when major news breaks, according to Dan Deming, who worked on the CBOE floor for 26 years. The securities, based on the price for options on the Standard & Poor’s 500 Index (SPX), have become one of the most common ways for investors to protect stocks from losses because they rise in value when equities tumble.
“There’s just a driving demand for volatility exposure,” Deming, a member of Stutland Volatility Group, said in a June 20 phone interview from Chicago. “In the case of some type of unforeseen event that takes place between Friday and Sunday, you’ll have the opportunity to trade around that instead of waiting until Monday morning.”
Before the change, the market open from 3 a.m. to 4:15 p.m. New York time on weekdays, with an additional session from 4:30 p.m. to 5:15 p.m. Monday through Thursday.
In the first five months of the year, about 7.5 percent of the contracts changed hands outside of regular U.S. hours, CBOE said in a press release this month.
“Volatility futures have had phenomenal success,” Robert Whaley, a finance professor at Vanderbilt University in Nashville, Tennessee, said by phone June 18. Whaley designed the VIX, which was introduced in 1993. “People are interested in monitoring things more closely during domestic trading hours in their country.”
CBOE Holdings Inc. yesterday extended trading hours on Chicago Board Options Exchange Volatility Index futures, making them available almost around the clock. The VIX (VIX), used by people to protect stock holdings from losses or speculate on market swings, has dropped 21 percent this year to 10.85, less than two points from a record low.
While CBOE is hoping more hours will bring business from Europe and Asia, it will also attract U.S. traders in the middle of the night when major news breaks, according to Dan Deming, who worked on the CBOE floor for 26 years. The securities, based on the price for options on the Standard & Poor’s 500 Index (SPX), have become one of the most common ways for investors to protect stocks from losses because they rise in value when equities tumble.
“There’s just a driving demand for volatility exposure,” Deming, a member of Stutland Volatility Group, said in a June 20 phone interview from Chicago. “In the case of some type of unforeseen event that takes place between Friday and Sunday, you’ll have the opportunity to trade around that instead of waiting until Monday morning.”
Trading Hours
The market for VIX futures will operate from 6 p.m. Sunday to 4:15 p.m. Friday New York time, according to a statement from CBOE this month. On weekdays, trading will be continuous except for 15 minutes after 4:15 p.m.Before the change, the market open from 3 a.m. to 4:15 p.m. New York time on weekdays, with an additional session from 4:30 p.m. to 5:15 p.m. Monday through Thursday.
In the first five months of the year, about 7.5 percent of the contracts changed hands outside of regular U.S. hours, CBOE said in a press release this month.
“Volatility futures have had phenomenal success,” Robert Whaley, a finance professor at Vanderbilt University in Nashville, Tennessee, said by phone June 18. Whaley designed the VIX, which was introduced in 1993. “People are interested in monitoring things more closely during domestic trading hours in their country.”
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