When it comes to a retail investor’s journey, they typically start where they are comfortable. As they grow and learn, they tend to get more sophisticated, with many finding their way into index options.
For some, it’s a way to get exposure to a basket of stocks. For others, it’s all about the preferred tax treatment index options bring, and many use them for better precision in their zero-day-to-expiration trading strategies. Regardless of the reason that they find their way to index options, one thing is for sure: they are landing there at a growing rate.
Demand Growing Internationally
According to Catherine Clay, EVP and Global Head of Derivatives at Cboe (CBOE: Cboe), demand for access to U.S. capital markets from international traders is strong, with retail investors clamoring for exposure to the big names in AI and tech – whether it’s Nvidia Corp. (NASDAQ:NVDA), Tesla Inc. (NASDAQ:TSLA) or Advanced Micro Devices Inc. (NYSE:AMD) – as well as the index options that provide broad market exposure.
“We spend a lot of time with talent in the field and regions like Asia Pacific, for example, to help those clients find their pathways back into the U.S., and that’s not easy to do,” says Clay, “A lot of the time, they don’t even have the data.” Clay said Cboe focuses a lot of effort internationally on getting data into the hands of those participants who want to trade in the U.S. markets. Once they have the data, they then have to find a broker-dealer and clearing firm, and Cboe helps facilitate those connections. “We pride ourselves on being that connecting force,” says Clay.
Innovations Coming Down The Pike
While Cboe is known for innovating and launching new products, it isn’t one to rest on its laurels, and that can be seen in its plans for the remainder of this year and beyond. During the interview with Benzinga, Clay gave viewers a sneak peek into some of what Cboe plans to launch later this year, including the Cboe Magnificent 10 Index (MGTN) – and futures and options on that index – as well as continuous futures on Bitcoin and Ether.
Take the Cboe Magnificent 10 index, which will launch in the fourth quarter, for starters. The index will offer investors a way to gain targeted exposure to several of the most actively traded technology and growth-oriented stocks through cash-settled index futures and options. The index includes all the Magnificent 7 stocks – Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL), Apple Inc. (NASDAQ:AAPL), Amazon.com Inc. (NASDAQ:AMZN), Meta Platforms Inc. (NASDAQ:META), Microsoft Corp. (NASDAQ:MSFT), Nvidia and Tesla – as well as Advanced Micro Devices, Broadcom Inc. (NASDAQ:AVGO) and Palantir Technologies Inc. (NASDAQ:PLTR). Cboe plans to offer trading of MGTN futures and options on a nearly 24×5 basis, providing a comprehensive suite of tools for market participants seeking to manage risk, enhance yield and express their views on the most dynamic segment of the U.S. equity landscape – no matter their time zone.
As for the continuous futures on Bitcoin and Ether, that launch is slated for November 10 and will provide U.S. traders with an easy way to gain long-term exposure to digital assets, execute trading strategies and manage risk – all within a U.S.-regulated, centrally cleared and intermediated framework.
Whether traders are in Asia, Europe or North America, index options are growing in popularity, and Cboe is making them more accessible to everyone. It’s no wonder Clay says, “Cboe brings index options to life.”
Featured image courtesy of Cboe.
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