The CBOE Options Exchange is the world’s largest options exchange, founded in 1973. The contracts here focus on interest rates, individual equities, and indexes.
This exchange was originally known as Chicago Board Options Exchange. It changed its name in 2017 as a part of the rebranding by its holding company, CBOE Global Markets.
CBOE has also originated CBOE Volatility Index (VIX), which is recognized and used for market volatility.
CBOE in a nutshell
- The world’s largest options exchange, founded in 1973, focusing on rates, equities, and indexes.
- VIX, an important indicator of market volatility, has been developed by the CBOE.
- Global Reach: CBOE operates worldwide with various subsidiaries under the name CBOE Global Markets.
- Innovative Options: CBOE launched FLEX, SPXpm, LEAPS and Weeklys, which offer unique trading flexibility.
- Binary Options: You can trade binary options, including S&P 500 and VIX contracts, electronically through CBOEdirect.
Understanding the CBOE exchange
CBOE is popular among investors who want to buy and sell equities and derivatives. Furthermore, the holding company of this exchange allows the trading of numerous products.
Several subsidiaries are included in this organization, including Hanweck Associates LLC (a real-time analytics company), The Options Institute (an educational resource), and The Options Clearing Corporation (a central clearinghouse for listed options).
The global branches of the group are located in England, Canada, Hong Kong, Australia, Philippines, Japan, Ireland, Netherlands, and Singapore. This public company offers trading across multiple asset classes and geographies.
It includes the U.S. and European equities, global foreign exchange, exchange-traded products, futures, options, and multi-asset volatility products.
CBOE is considered the largest stock exchange in Europe and options exchange in the U.S. by value traded. Also, it is the second-largest stock operator in the U.S. and the top global market for ETP trading.
History of the Chicago Board Of Options Exchange
For traders who want to sell and buy exchange-listed options, CBOE has represented the first U.S. market. It helps the options market become successful.
Two years after this exchange was founded, it introduced The Options Clearing Corporation (OCC) and automated price reporting and trading. By 1977, other developments that followed included put options.
CBOE has also created options for broad-based indices using S&P 500 and S&P 100. Later in 1993, this exchange created its market volatility called CBOE Volatility Index. The options institute was formed in 2015. Not to mention, this exchange also started an educational branch to bring investors information regarding options.
The educational institute is known to offer monthly classes and events. CBOE has also created unique trading products since 1990. Some notable introductions include Flexible Exchange (FLEX) options in 1993, an electronic S&P options contract called SPXpm in 2011, LEAPS (Long-Term Equity Anticipation Securities) launched in 1990, and short-term options known as Weeklys in 2005.
Traders get an opportunity to form a variety of products across multiple markets. For instance, CBOE offers a range of put and call options on numerous publicly traded stocks, exchange-traded notes, and exchange-traded funds. These tradable products can be used for strategies like hedging and more.
Traders can also sell cash-secured puts or covered calls to gain income. Traders use these options strategies because they give flexibility and the ability to adjust their stock exposure.
Investors can have CBOE options markets or alternatives, which include FX market MTF and electronic communication networks.
Does the CBOE offer Binary Options?
Yes, the Chicago Board Options Exchange (CBOE) offers binary options.
Traders with an options-approved brokerage account can trade CBOE Binary Options, including contracts linked to the S&P 500 Index (SPX) and the CBOE Volatility Index (VIX). These European-style listed contracts are traded electronically through CBOEdirect and match the expiration and settlement schedule of traditional options on the same underlying assets.
CBOE is an options exchange that takes effort to educate traders and open the market to broader investors. But options trading is risky. So, the traders involved in its marketing must fully understand everything before implementing it.
Although there is a chance to earn huge profitability, there’s also a risk in the option’s liquidity. If you want to learn more about the definition of liquidity, consider reading our glossary article about this topic.