CME to launch E-mini Russell 2000 Monday and Wednesday options

New weekly options contracts will increase precision, adding more granularity to trading strategies, allowing Russell 2000 Index exposure to be more fine-tuned, said the exchange.

Chicago-based derivatives marketplace CME Group will be launching E-mini Russell 2000 Monday and Wednesday options on 4 October, subject to regulatory approval.

The new options contracts will accompany existing options on Russell 2000 futures including Friday Weekly, End-of-Month and Quarterly options.

E-mini Russell 2000 Monday and Wednesday options, similar to the other existing options, will be European-style with a 4pm ET expiry on Mondays and Wednesdays.

The new weekly options will allow participants to trade with more precision, adding more granularity to trading strategies and allowing Russell 2000 Index exposure to be more fine-tuned.

These short-term options will offer greater flexibility to manage high-impact event risk, adding versatility to manage positions.

The options will also allow traders to access E-mini Russell 2000 futures liquidity, which averaged 205,000 contracts traded daily last year.

“As the demand for more short-dated options continues to grow, we are expanding our product suite to allow our clients to hedge or trade with enhanced flexibility around major market-moving events,” said Tim McCourt, global head of equity index and alternative investment products at CME Group.

“Weekly options on our deep, liquid underlying futures contracts also provide market participants with a more cost-effective and efficient toolset to manage risk in the small-cap segment.”

It’s been an eventful month for CME, which had been subject to – though refuted – rumours it would bid for rival exchange Cboe, while the Group also launched a new post-trade services unit in partnership with IHS Markit.

“With around $10.6 trillion in AUM benchmarked against the Russell US indexes, FTSE Russell, in collaboration with CME Group, are committed to continuing to develop the underlying risk management markets in the Russell indexes,” said Ricardo Manrique, FTSE Russell’s head of derivatives strategy.

“The E-mini Russell 2000 options provide a highly efficient and cost-effective way to gain market exposure to US small caps, and this latest expansion of the Russell index derivatives complex on CME reflects both the strength of the FTSE Russell index franchise and the ability of CME Group to meet client needs with innovative solutions.”