“We’re Going To Need More Cocaine” – Cboe Plans To Launch 24-Hour-A-Day Trading In VIX, SPX Options

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“We’re Going To Need More Cocaine” – Cboe Plans To Launch 24-Hour-A-Day Trading In VIX, SPX Options

The Cboe, which is locked in a battle to the death with its arch-rival CME, just excited legions of retail traders by announcing plans to extend global trading hours for SPX and VIX options to enable trading in these products 24-hours-a-day, 5-days-a-week.

Starting in the fourth quarter, the “global” (or overnight) trading session in these options will begin at 2015ET until 0915 the following day. Presently, the global session begins at 0300ET (tradings can also trade these products during market hours, and during an after-market session).

In its press release, the CBOE said trading in SPX and VIX options exploded by 76% during 2020 compared with the prior year.

The overnight session isn’t the only extension being announced Thursday. Starting in Q3, the Cboe will extend its RTH (that is, regular trading hours) session by adding an extra “curb” session that will run for 30 minutes between 1630 and 1700 (RTH runs 0930 to 1615).

Cboe added that the expansion in the GTH session will complement its planned entry into Asia Pacific markets, where it hopes to offer trading and its global market data services (late last month, the Cboe announced plans to acquire Chi-X Asia Pacific, operator of Chi-X Australia and Chi-X Japan).

Although the Cboe claims it moved to extend trading hours to  meet “growing investor demand for the ability to manage risk more efficiently, react to global macroeconomic events as they are happening and adjust SPX and VIS options positioned around the clock.”

But a quick look at traders’ response on twitter should quickly disabuse readers of the notion that this decision will encourage ‘responsible risk-management’.

But in the age of crypto, where cryptocurrencies like bitcoin trade 24/7/365, the army of new retail traders to emerge in US markets over the past year has been clamoring for longer trading sessions for US equity-linked options and futures (although the foreign exchange market is technically “open” 24/7,trading retail fx never caught on in the west like crypto did – but that’s another issue). In fact, they’ve come to expect it, and it was probably only a matter of time before somebody moved to offer it – just like it was only a matter of time before Robinhood came around and demolished fees for stock trades, setting a new market standard.

Looking ahead, we can’t help but wonder: will the Cboe or rival CME move to extend trading in spoos to 7 days a week?

At least then Wall Street Bets can stop whining about gazing longingly at their positions all weekend.

Read the full Cboe press release below:

Cboe Global Markets, Inc. (Cboe: CBOE), a market operator and global trading solutions provider, announced plans to extend the global trading hours session (GTH) for its S&P 500 Index options (SPX) and Cboe Volatility Index (VIX) options to nearly 24 hours each business day on Cboe Options Exchange in the fourth quarter of 2021, subject to regulatory review.

Cboe’s move to offer a nearly 24 hours-a-day, five days-a-week (24×5) trading model aims to provide global market participants with expanded access to trade Cboe’s exclusively listed U.S. index options products based on the S&P 500 Index (SPX), the global benchmark of large-cap U.S. equities, and the Cboe Volatility Index (VIX), recognized as the world’s premier gauge of U.S. equity market volatility. The lengthened global trading hours are designed to help meet growing investor demand for the ability to manage risk more efficiently, react to global macroeconomic events as they are happening and adjust SPX and VIX options positions around the clock.

“The S&P 500 and VIX Indices are widely tracked globally, with Cboe’s SPX and VIX options used by investors both domestically and internationally looking to trade, hedge or gain exposure to the broad U.S. market and global equity volatility,” said Arianne Criqui, Senior Vice President, Head of Derivatives and Global Client Services at Cboe Global Markets. “As financial markets around the world become more interconnected, it is crucial that market participants have the ability to trade products that meet their investing objectives when and how they need, no matter the time of day. Cboe continues to focus on broadening its geographic reach and extending access to its unique product set to investors around the globe to meet this demand.”

Cboe’s expansion of its GTH session is expected to complement its planned entry into the Asia Pacific markets, where it sees opportunity to further broaden its distribution network and offer a wide range of its core product offerings, including its proprietary products and global market data service, to customers in the region. On March 24, Cboe announced its plans to acquire Chi-X Asia Pacific Holdings, Ltd., operator of Chi-X Australia and Chi-X Japan.

SPX and VIX options are currently available in a GTH session that runs from 3:00 a.m. ET to 9:15 a.m. ET. In 2020, the combined average daily volume (ADV) for SPX and VIX options during the current GTH session increased 76 percent over 2019. VIX futures are currently available in nearly 24×5 trading. In 2020, over 15 percent of total VIX futures volume occurred in GTH, up from 13 percent in 2019.

The planned expanded GTH session would commence at 8:15 p.m. ET and run until 9:15 a.m. ET the following morning. Regular trading hours (RTH) then run from the U.S. market open at 9:30 a.m. ET until the market close at 4:15 p.m. ET. The RTH session will also be followed by a new curb session – an extra half hour session for electronic trading beginning at 4:30 p.m. ET– which will be added Monday through Friday in the third quarter of 2021. For each Monday business day, trading in GTH would begin Sunday evening.

The extended GTH session will not impact operations of regular trading hours on the Cboe Options Exchange trading floor in Chicago. For additional information on the extended global trading hours for SPX and VIX options, please click here.

Tyler Durden
Thu, 04/08/2021 – 18:00

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