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The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.
Few possess a track record of arguably market-defining products like Cboe Global Markets Inc. (BATS: CBOE).
Founded in 1973, the global exchange operator has helped push the global marketplace forward through product innovation and leading trading solutions. Cboe® remains one of the world’s largest, and its proprietary Cboe Volatility Index® (VIX® Index), dubbed “the Fear Index,” has become a common go-to for gauging market sentiment.
The company’s extensive “list of firsts” proves just how long Cboe has been shaping the market. Aside from listing the first-ever options contract, it was also the first to list index options, VIX options, and VIX futures. The innovation Cboe has shown in products extends onto its markets. The first listed options marketplace, the first alternative venue to traditional equity markets, and the first electronic communication network (ECN) for the institutional foreign exchange market belong to Cboe. They’ve also recently announced plans to launch Nanos, a first-of-its-kind options contract designed to simplify options trading.
Cboe has also curated multiple avenues through which investors can buy and sell their securities. Its acquisition of BATS Global Markets places the EDGX, EDGA, BZX, and BYX exchanges all under Cboe’s vast umbrella of market-defining products, through which over 1 billion shares are traded daily in the U.S.
Cboe also operates overseas in Europe, where its order books gross more than $9 billion (8 billion euros) in average daily notional trading value and control over 20% of market share. It’s difficult to find many stock market stakeholders who have not been influenced or affected by Cboe’s products, but not many know the company in its entirety.
Getting the Most Out of Cboe?
Cboe’s Tradeable Products line attempts to provide investors with a comprehensive toolkit for risk management, the first of which is U.S. equity index options.
SPX options, ESG SPX options, Russell 1000 Index options, RUT Index options, S&P 100 Index options, and DJX Index options are all part of this particular group. Trading indices, as opposed to individual stocks, is an often-used method in mitigating risk. Index options can assist investors to diversify their portfolios, lower their volatility, increase their liquidity and gain better tax treatment all through a single trade. Cboe provides up to 9 different index options to choose from.
If indices are not to their liking, investors can leap over to Cboe’s volatility derivatives. VIX options and futures provide a similar venue for risk mitigation. VIX options, for example, enable market participants to hedge portfolio volatility risk and trade based on their view of the future movement of volatility. In uncertain times, like the advent of a pandemic, these derivatives can end up being quite lucrative.
Cboe Options Exchange has extended global trading hours (GTH) for S&P 500® Index (SPX) options and VIX Index options to nearly 24 hours a day, five days a week. Trade or hedge broad U.S. market and global equity volatility conveniently across all time zones, day and night. The expanded trading hours brings a number of benefits to market participants around the world.
Additionally, Cboe accounts for investors interested in international markets through its MSCI Emerging Market Index (MXEF) and MSCI EAFE Index (MXEA) options. Those that are a little more comfortable with instruments like corporate credit and interest rates can find tools in Coeb’s iBoxx iShares High Yield Corporate Bond Futures (IBHY) or iBoxx iShares Investment Grade Corporate Bond Futures (IBIG).
As an operator that ranks 1st in the U.S. for retail-driven liquidity, Cboe also strives for products that are equally available to its smaller customers. At 1/10th the size of the standard contracts, the Mini-S&P 500, Mini-Russell 2000, and Mini-VIX index options are set at a price that allows retail traders to more easily participate in miniature versions of the SPX and RUT indices.
Cboe’s drive is to produce the derivatives and markets that shape the financial world, and the company says that traders and investors alike could benefit from their host of products.
Luckily, that world is one click away.
There are important risks associated with transacting in any of the Cboe Company products discussed here. Before engaging in any transactions in those products, it is important for market participants to carefully review the disclosures and disclaimers contained at http://www.cboe.com/options_futures_disclaimers.
Readers should understand that the authors were compensated by Cboe for the preparation of this article, which is not intended to be used in connection with the offering for purchase or sale of any product. The information in this article is for informational purposes only and no statement within this article should be construed as investment advice or a recommendation to buy or sell a financial product. The authors and Cboe make no representation as to the appropriateness of any of the products discussed for any investor. Neither the authors nor Cboe assume any responsibility for any losses you might suffer by reason of investing in any of the products discussed.
The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.
© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.