September 12, 2017 / 10:35 AM / a year ago

DERIVATIVES-CBOE plans S&P Select Sector Index options

LONDON, Sept 12 (IFR) - CBOE plans to launch options contracts referencing the 10 sector indices that comprise the S&P 500, offering investors new ways to efficiently incorporate US sector strategies into their portfolios.

The S&P Select Sector Index contracts are scheduled to launch in the fourth quarter of 2017 or early 2018, pending regulatory approval. The new index options are expected to have particular appeal for European investors who cannot currently hold options on exchange-traded funds under UCITS rules.

“We will be able to provide exposure to these key US sector indices for European customers who have been keen to incorporate US sector investing strategies into their portfolios, but have not had access to an efficient trading vehicle to realise this strategy,” said Chris Concannon, president and chief operating officer of CBOE Holdings, speaking at the CBOE’s European risk management conference near London this morning.

“CBOE Select Sector Index options will offer European asset managers and investors the targeted exposure to US equity sectors they have been missing, and also give US asset managers a new avenue for options investment.”

The European-style cash-settled options will expire on the third Friday of each month, similar to CBOE’s S&P 500 options.

All components of the S&P 500 are assigned to at least one of 10 S&P Select Sector indices, comprising financial, energy, technology, healthcare, utilities, consumer staples, industrials, consumer discretionary, materials and real estate.

CBOE is also planning to launch bitcoin futures around the same time, following its recent agreement with Gemini, the cryptocurrency exchange founded by Cameron and Tyler Winklevoss. (Reporting by Helen Bartholomew)

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