Cboe Global Markets has launched options on three new MSCI indices as part of the firm’s plans to deepen its relationship with MSCI.
The three new MSCI index options – namely Cboe MSCI world index option (MXWLD), Cboe MSCI ACWI index options (MXACW) and Cboe MSCI USA index option (MXUSA) – are designed to provide investors with exposure to international, developed and emerging markets, and US equity market performance.
Pension funds, insurance companies and other institutional investors will be provided with more efficient ways to hedge their global equity exposure, while minimising potential trading error and currency risk.
Each of MXWLD and MXUSA are based on a fraction (1/100th) of the value of its underlying index, which Cboe claims will make these options more accessible for retail investors.
“As more investors seek global equity exposure, adding three new options on MSCI’s world renowned benchmarks was the natural next evolution for Cboe’s suite of index options products,” said Catherine Clay, head of global derivatives at Cboe Global Markets. “
“Whether investors are looking to hedge their portfolios, generate yields, or make directional trades, we have seen heightened interest in the optionality derivatives can provide. These new index options, and the MSCI volatility benchmark indices launched recently will provide important tools in helping investors manage their global exposures.”
For portfolio managers running options overlay strategies, the recently launched index options will allow investors to expand their overlay programs to their global portfolio, alongside diversifying the sources of potential income in their portfolio.
Cboe added that a potential benefit of overwriting the newly launched MSCI index options include their European-style cash settlement, which helps to eliminate risk of early exercise and physical settlement.