VOLQ futures respond to growing demand for tools to hedge portfolio volatility exposure or trade at-the-money volatility on the Nasdaq-100.
International derivatives marketplace CME Group Inc (NASDAQ:CME) and Nasdaq today announced plans for a new futures contract on the Nasdaq-100 Volatility Index (VOLQ).
CME Group is set to launch its new Nasdaq-100 Volatility Index futures contracts on October 5, 2020, pending regulatory review.
Introduced by Nasdaq in early 2019, the VOLQ Index measures 30-day implied volatility of the Nasdaq-100 Index (NDX), which helps market participants better understand and manage portfolio volatility. This real-time volatility index is expressed by the prices of certain listed NDX options to obtain precise, at-the-money options prices, which are the most commonly used options by market participants. This innovative approach allows volatility traders to use an implied volatility index that focuses on the options increasingly used by strategists, hedgers and traders.
The new futures contract will be cash-settled based on the VOLQ Index, with one contract equal to $1,000 multiplied by the index. VOLQ futures will be listed by and subject to the rules of CME.
“We’re pleased to further build on our longstanding, successful relationship with Nasdaq to offer these new futures contracts on the innovative Nasdaq-100 Volatility Index,” said Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products. “VOLQ futures respond directly to growing demand for tools to hedge portfolio volatility exposure or trade at-the-money volatility on a leading global benchmark equity index, the Nasdaq-100. Additionally, they will complement our deeply liquid Nasdaq futures and options product line, including the benchmark E-mini and Micro E-mini Nasdaq-100 contracts.”
“The Nasdaq-100 index tracks the world’s most innovative companies and has shown incredible strength and resilience through its outstanding performance,” said Lauren Dillard, EVP and Head of Nasdaq’s Global Information Services. “The VOLQ index enables investors to track Nasdaq-100 volatility, and CME Group’s launch of VOLQ futures is a great step in bringing more innovative products around market volatility to investors.”