Chicago Board Options Exchange

The Chicago Board Options Exchange (NASDAQ: CBOE), located at 400 South LaSalle Street in Chicago, is the largest U.S. options exchange with annual trading volume that hovered around one billion contracts at the end of 2007.^[1] CBOE offers options on over 2,200 companies, 22 stock indices, and 140 exchange-traded funds (ETFs).

The Chicago Board of Trade established the Chicago Board Options Exchange in 1973. The first exchange to list standardized, exchange-traded stock options began its first day of trading on April 26, 1973, in a celebration of the 125th birthday of the Chicago Board of Trade.^[2][3] The CBOE is regulated by the Securities and Exchange Commission.

Operations

CBOE's options contracts are cleared by the Options Clearing Corporation (OCC). As of approximately April 11, 2007, the Wall Street Journal estimates that globally the market capitalization of the derivatives markets (futures, options, swaps, etc.) exceeds 450 trillion dollars (while US stock exchanges have approximately 30 trillion and the rest of the worlds stock exchanges total to about another 20 trillion, to a total of about 50 trillion--while the global fixed income markets total to roughly 65 trillion).

In 2004, CBOE opened trading on the CBOE Futures Exchange for volatility and variance contracts and in 2007 launched a Reg NMS-compliant stock exchange called the CBOE Stock Exchange (CBSX) to compete with the NYSE, Nasdaq, and other regional exchanges.^[4]

Trading at CBOE is carried out by way of the exchange's Hybrid system, which enables customers to choose how their orders are handled – either electronically or through open outcry. About 95 percent of CBOE orders are traded electronically, which equates to between 50 and 60 percent of the exchange's total business. The remaining transactions, traded via open outcry, typically are large or complex institutional orders that use the skills of floor brokers to "work the order" to gain potential price improvement.

On March 11, 2010, CBOE filed paperwork to launch an initial public offering.^[5]

Contracts offered

The CBOE (and other national options exchanges) offers options on the following, and others:

• S&P 500 Index (ticker SPX)
• S&P 100 Index (OEX)
• Dow Jones Industrial Average (DJX)
• NASDAQ-100 Index (NDX)
• Russell 2000 Index (RUT)
• S&P 500 Depositary Receipts - SPDRs (SPY)
• NASDAQ-100 Trust (QQQQ)
• Nasdaq Composite (ONEQ)
• S&P Latin American 40 (ILF)
• S&P MidCap 400 (MDY, IJH, and CBOE root symbol MID)
• Cohen & Steers Realty Majors Index (ICF)
• Wilshire 5000 (VTI)
• MSCI EMIF (EEM)
• MSCI EAFE (Europe-Asia-Australia-far-east) (EFA)
• Dow Diamonds Trust (DIA)
• China 25 Xinhua/FTSE Index (FXI)
• Brazil San Paulo Stock Exchange (EWZ)
• Microsoft (MSFT)
• General Electric (GE)
• Altria (MO)

The CBOE calculates and disseminates the CBOE Volatility Index (VIX), the CBOE S&P 500 BuyWrite Index (BXM), and other indexes.

See also

• Chicago Board of Trade Building
• Commodity Futures Trading Commission
• Derivatives market
• List of futures exchanges
• National Stock Exchange, Chicago
• OneChicago
• Volatility Index

References

1. ^ "Choose CBOE". Chicago Board Options Exchange. http://www.cboe.com/AboutCBOE/ChooseCBOE.aspx. Retrieved 2008-10-14. 
2. ^ "Options Exchange Opens On Parent's Anniversary". St. Petersburg Times (United Press International): p. 37. April 27, 1973. http://news.google.com/newspapers?id=gzIMAAAAIBAJ&sjid=9V8DAAAAIBAJ&pg=5611,1289206&dq=cboe&hl=en. Retrieved 2009-10-16. ^{[dead link]}
3. ^ "History". Chicago Board Options Exchange. http://www.cboe.com/AboutCBOE/History.aspx. Retrieved 2008-10-14. 
4. ^ "CBOE Stock Exchange (CBSX) To Postpone Launch Date In Conjunction With Delay Of Reg NMS Effective Date". Chicago Board Options Exchange. 2007-01-24. http://www.cboe.com/AboutCBOE/ShowDocument.aspx?DIR=ACNews&FILE=cbsx_20070124.doc. Retrieved 2008-10-14. 
5. ^ "CBOE files paperwork for IPO". Chicago Breaking Business. http://www.chicagobreakingbusiness.com/2010/03/cboe-to-take-first-step-toward-ipo.html. 

External links

• Chicago Board Options Exchange