CHICAGO and BOCA RATON, Fla., March 12, 2014 /PRNewswire/ -- Chicago Board Options Exchange ® (CBOE ®) today announced that it plans to launch trading of options with weekly expirations on the CBOE Short-Term Volatility Index SM (ticker symbol: VXST SM) on Thursday, April 10, pending regulatory approval.
The CBOE Short-Term Volatility Index and CBOE Volatility Index
® (VIX Index
®) are complementary. Like the VIX Index, the VXST Index reflects investors' consensus view of expected stock market volatility using CBOE's proprietary VIX methodology. Both indexes use S&P 500
® Index (SPX
SM) options in their calculations. The VIX Index uses SPX monthly options to measure expectations of 30-day volatility, while the VXST Index uses SPX options that expire every week (including SPX Weeklys
SM options) to gauge expectations of nine-day volatility. The VXST Index's shorter time horizon makes it particularly responsive to short-term volatility triggered by market events such as corporate earnings, government reports and Fed announcements.
"We view short-term volatility as the next frontier in the ongoing development of the volatility trading space. We were pleased to introduce the Short-Term VIX Index in October, Short-Term VIX futures in February, and we now look forward to launching options on VXST," CBOE Holdings CEO Edward T. Tilly said. "Our new Short-Term VIX futures and options offer some compelling trading opportunities. We foresee investors using these new volatility products to better manage near-term volatility risk, to hedge short-term positions impacted by both event-driven and unexpected market moves, and to create strategies using VXST and VIX futures and options to capture changes in volatility term structure."
The 30-day VIX Index and the nine-day VXST Index are highly correlated, but the VXST Index is generally more volatile than the VIX Index.
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