“As more investors seek global equity exposure, adding three new options on MSCI’s world-renowned benchmarks was the natural next evolution for Cboe’s suite of index options products.”
Cboe Global Markets has further expanded its suite of MSCI tradable products, this time focused on index options for exposure to the world and to the United States.
The leading derivatives exchange has launched Cboe MSCI World Index Options (MXWLD), Cboe MSCI ACWI Index Options (MXACW), and Cboe MSCI USA Index Options (MXUSA) for trading.
European-style cash settlements to avoid early exercise and physical settlement issues
The newly introduced index options aim to provide investors, including pension funds and insurance companies, with efficient ways to hedge against global equity market fluctuations. Notably, MXWLD and MXUSA are pegged to 1/100th of their respective index values, enhancing accessibility for retail investors.
The options, featuring European-style cash settlements to avoid early exercise and physical settlement issues, are seen as particularly beneficial for portfolio managers employing options overlay strategies. This flexibility allows for diversification and potential income enhancement across global portfolios.
Initially, MXACW, MXUSA, and MXWLD options will be listed with standard monthly expirations. Plans for listing additional end-of-week expirations, starting March 21, 2024, are also underway. These offerings join Cboe’s existing MSCI EAFE and Emerging Markets index options, alongside the newly developed Cboe MSCI EAFE and Emerging Markets Volatility Indices. These volatility indices, based on Cboe’s proprietary VIX Index methodology, provide insights into the expected 30-day implied volatility of international and emerging equity markets, analogous to the U.S. stock market’s VIX Index.
“Important tools in helping investors manage their global exposures”
Catherine Clay, Head of Global Derivatives at Cboe Global Markets, said: “As more investors seek global equity exposure, adding three new options on MSCI’s world-renowned benchmarks was the natural next evolution for Cboe’s suite of index options products. Whether investors are looking to hedge their portfolios, generate yields, or make directional trades, we have seen heightened interest in the optionality derivatives can provide. These new index options, and the MSCI volatility benchmark indices launched recently will provide important tools in helping investors manage their global exposures. We look forward to building upon our relationship with MSCI and providing investors the global risk management tools they need.”
