What is CBOE?

What is CBOE (Chicago Board Options Exchange)？

　　The Chicago Board Options Exchange (CBOE) is the premier options exchange in the United States, with headquarters at 433 West Van Buren Street in Chicago. Over 2,200 firms, 22 market indices, and 140 exchange-traded funds are available through CBOE. Today I will take you through the function and importance of the Chicago Board Options Exchange.

Introduction to Chicago Board Options Exchange

　　The CBOE Options Exchange, which was founded in 1973, is the world's largest and most important options exchange, with contracts focused on specific stocks, indexes, and debt levels.

　　The Chicago Board Options Exchange (CBOE) was renamed the Chicago Board Options Exchange (CBOE) in 2017 as part of a rebranding attempt by its owning company, CBOE Global Markets. It's pronounced as “see-bo”. The CBOE Volatility Index, the most frequently used and acknowledged proxy for price volatility, was created by CBOE.

Introduction to Chicago Board Options Exchange

　　The CBOE is a major options exchange situated in Chicago that was established in 1973. Originally, it was known as the Chicago Board Options Exchange (CBOE). The exchange became a holding company in 2010, with the exchange as its primary asset, CBOE Global Markets Inc. and the CBOE Options Exchange relaunched as CBOE Global Markets Inc. and the CBOE Options Exchange. The VIX volatility index, as well as several other volatility products, are maintained at CBOE.

How Does Chicago Board Options Exchange Work？

　　Options, futures, U.S. and European stocks, exchange-traded products (ETPs), worldwide Forex (FX), and multi-asset volatile products are among the financial assets and geographies covered by CBOE. By value traded, it is the top options exchange in the United States and the largest stock exchange in Europe. It is also the second-largest stock exchange operator in the United States and a leading global ETP trading market.

　　The CBOE Clearing Corp., which eventually became the Options Clearing Corporation (OCC), the market center for all U.S. options trades, has a long relationship with the exchange.

What Products Does CBOE Provide？

　　The CBOE's business extends beyond simple transaction executions; in 1985, it established The Options Institute, an academic arm dedicated to educating individuals all over the world about options. Moreover, the organization provides conferences, workshops, and e-learning programs, as well as professional development.

　　The exchange provides access to a wide range of products, including put and call options on thousands of publicly listed companies, exchange-traded funds (ETFs), and exchange-traded notes (ETNs). Investors often utilize these instruments to hedge their positions and generate profits by selling covered calls or cash-secured puts.

　　The S&P 500, S&P 100, Dow Jones Industrial Average, Russell indexes, selected FTSE indexes, Nasdaq Indexes, MSCI Indices, and sector indexes, such as the S&P 500's 10 sectors, are among the equity and sector indexes offered.

　　The exchange provides social media indices as well as specialty indices for a variety of investment options, including “put write”, collar, and butterfly. The CBOE Global Markets' volatility franchise's signature index is the VIX Index. Volatility indexes on broad-based stock indexes, ETFs, commodities, individual stocks, and other specialty price indexes are included in this category.

　　The VIX index is the most widely used indicator of stock market volatility. This index is calculated using accurate current pricing of near-the-money options on the S&P 500 Index and is intended to reflect investors' expectations for anticipated stock market volatility. The VIX Index is known as the “fear gauge” among traders since it tends to soar to extremely high levels when investors expect the market is extremely negative or volatile.

Conclusion

　　We hope this guide clears all your queries on the Chicago Board Options Exchange.

FAQs

　　Is CBOE The only options exchange？

　　No, CBOE is not the only options exchange in the world.

　　How does CBOE make money？

　　Majority of CBOE's revenue comes from fee income. Exclusive license agreements for S&P 500 Index options (42%) and fluctuation-based options and futures (76%) account for 76 percent of their income (36 percent).

　　Who started the CBOE？

　　Joseph Sullivan III launched the listed options sector in the United States 47 years ago when he established the Chicago Board Options Exchange (CBOE).

　　Who runs CBOE？

　　CBOE Global Markets is an American corporation that owns and administers the Chicago Board Options Exchange as well as BATS Global Markets, a stock exchange operator.

　　How large is CBOE？

　　CBOE has a $90.1B average daily volume in US equities and $10.4M in US options.