CHICAGO, June 9 The Chicago Board Options
Exchange said on Monday it plans to offer binary options on the
Standard & Poor's 500 Index .SPX and the CBOE Volatility
Index .VIX on July 1,
The largest U.S. options market said the U.S. Securities
and Exchange Commission approved its rule filing to list
cash-settled binary options on broad-based indexes on May 22.
A binary option, which traditionally had been part of the
over-the-counter market, is an option where the payoff is
either a set amount or nothing at all.
CBOE binary options contracts, on which calls will be
listed first, pay either a fixed cash settlement amount if the
underlying index settles at or above the strike price at
expiration, or nothing at all if the underlying index settles
below the strike price at expiration.
The products are expected to attract a broad range of
participants, including individual investors, hedge funds and
institutions, who have an opinion, one way or another, on
future price movements in the SPX or the VIX, said CBOE
chairman and Chief Executive William Brodsky in a statement.
Through May, volume in SPX options rose to nearly 65
million contracts. Options on VIX, often called Wall Street's
fear gauge, totaled more than 10 million contracts. Both SPX
and VIX notched record volume for the 2008 five-month period,
(Reporting by Doris Frankel; Editing by James Dalgleish)