Cboe Global Markets has expanded its S&P product suite with the launch of trading options for S&P 500 Equal Weight Index (EWI), to provide greater investor choice and diversification opportunities.
Megan Morgan
The derivatives and securities exchange network has said that the launch will complement Cboe’s S&P 500 Index (SPX) options.
The expansion comes following increasing conversations around equity index exposure in recent years, as well as growing interest in options to manage US equity market exposure and volatility.
Belvedere Trading will act as the lead market maker.
Megan Morgan, head of market structure at Belvedere Trading, said: “The addition of S&P 500 Equal Weight Index options by Cboe is timely and we are excited for the opportunity to serve as the lead market maker. We have long found value in the S&P 500 Index ecosystem and Cboe’s trading floor, and as the market evolves, more tools in the toolkit are always welcomed.”
Through using the S&P 500 EWI options, the exchange provider aims to allow market participants to make directional trades based on their views of macro trends and shifts in equity market dynamics.
Catherine Clay, global head of derivatives at Cboe said: “We expect these options to cater to both retail and institutional investors looking to diversify and implement a variety of trading strategies, ultimately providing them greater choice and ability to tailor their exposure to fit their needs.
Cboe said that an S&P 500 EWI options contract would have a mid-sized notional value of approximately $63,200 as of market close on 7 April, to open up greater options access to more market participants.
Similarly, the launch also addresses challenges of physical delivery through cash settlement, as well as the risk of early assignment and uncertainty around implementing hedging strategies through European-style expiration.
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