CBOE Launches New Twist On S&P 500 BuyWrite Options

Recent market volatility has led to a surge in options volume, with new records being set almost every day. It has also played into the popularity of market hedging strategies, such as the BuyWrite Index options, and the Chicago Board Options Exchange has wasted no time expanding the ways in which market participants can trade on its S&P 500 BuyWrite Index.

The CBOE began trading CBOE S&P 500 BuyWrite Index (1/10th value) options (ticker symbol: BXO) on September 23. The CBOE S&P 500 BuyWrite Index (ticker symbol: BXM), on which the BXO is based, is a broad-based benchmark index that tracks the performance of a hypothetical BuyWrite (covered call) strategy against a long portfolio of stocks in the S&P 500 Index. BXM was the first major benchmark index for options-related performance. There is now $30 billion tied to BuyWrite products since BXM launched in 2002.

The options, based on 1/10th the value of the BXM, will allow for more flexibility and risk management in covered call portfolios and structured products.