{"product_id":"v224newvofub","title":"V. 22:8 (48-53): The New Volatility Futures by Larry McMillan","description":"The New Volatility Futures by Larry McMillan\u003cbr\u003e\u003cbr\u003eThey just might be the stock owners delight.\u003cbr\u003e\u003cbr\u003eThe CBOE has created a new futures exchange\n(the CBOE Futures Exchange, or CFE) to trade\nvolatility products. Its first and only product\nat this time is futures on VIX, the CBOE\nvolatility index, but the CBOE plans to introduce\nmore volatility-related products soon.\u003cbr\u003e\u003cbr\u003eSome traders might dismiss these products as simply an\nopportunity for option-crazed investors. But in reality, these\nproducts will find application for a far wider audience than\nspeculators: stock owners can benefit from the ability to\nhedge their portfolios against volatility risk. In many cases,\nthat translates into a hedge against a falling market. For this\nreason, the CBOE expects these products to be quite successful\neventually.\u003cbr\u003e\u003cbr\u003eThis article will lay out the basics of the futures, discuss\nsome strategies, and show how a conservative volatility\nhedge would have worked over the last 10 years.\u003cbr\u003e\u003cbr\u003eMECHANICS OF THE CONTRACT\u003cbr\u003e\u003cbr\u003eIntroduced in 1993, the VIX was created to measure implied\nvolatility of OEX options. In 2003, the CBOE changed the VIX to be the measure of implied volatility of Standard \u0026amp; Poors\n500 Index (SPX) options. The old VIX became VXO, and that\nindex still measures the implied volatility of OEX options.\u003cbr\u003e\u003cbr\u003eTo implement the VIX futures, a new volatility index called\nthe Jumbo CBOE Volatility Index (symbol: VXB) has been\nintroduced. VXB is equal to 10 times VIX. Futures on the\nJumbo VIX are worth $100 per point of movement of VXB, so\none futures contract will make or lose $1,000 when VIX\nmoves by one full point (from 15.00 to 16.00, for example).","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52134099878257,"sku":"\\V22\\C08\\169MCML.pdf","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_98985a00-d423-49e6-8d44-1682548a66dd.jpg?v=1739666451","url":"https:\/\/shop.traders.com\/products\/v224newvofub","provider":"Stocks \u0026 Commodities","version":"1.0","type":"link"}