CME Group to Launch Futures on Nasdaq-100 Volatility Index


CME Group and NASDAQ will launch a new futures contract on the NASDAQ-100 Volatility Index (VOLQ) on 5 October 2020.

14 August 2020 | AtoZ Markets – CME Group is a global financial derivative exchange offering futures, options, stock indexes, forex, energy, agricultural, and metal trading services. Founded in 1898, Its headquarter is in Chicago, IL. NASDAQ is a holding company that provides trading, clearing, exchange technology, stock listing, information, and public company services.

CME Group to Launch New Futures Contract

CME Group is making a play for the volatility derivatives market by launching a new futures contract based on the NASDAQ-100 Volatility Index (VOLQ). The Volatility Index expected to lunch on 5 October after regulatory approval. NASDAQ introduces the VOLQ Index in early 2019.

“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 the 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.”

30-Day Implied of VOLQ Volatility Index

The new index measures the 30-day implied volatility of the Nasdaq 100 Index to obtain the price of synthetic precision at-the-money (ATM) options. It also helps market participants to better understand and manage portfolio volatility.

This real-time volatility index communicated by the price of a particular listed NDX option. Moreover, it will give traders an accurate option price. This approach also allows volatility traders to use an implied volatility index focused on the options. Strategists, hedgers, and traders mainly use this approach. However, the new futures contract will be settled in cash based on the VOLQ index. One contract is $1,000 multiplied by the index. Lauren Dillard, EVP, and Head of Nasdaq’s Global Information Services also said:

“The Nasdaq-100 index tracks the world’s most innovative companies. It has shown incredible strength and resilience through its outstanding performance. The VOLQ index also enables investors to track Nasdaq-100 volatility. CME Group’s launch of VOLQ futures is a great step in bringing more innovative products around market volatility to investors.”

Trading VOLQ futures could complement trading Cboe’s VIX products if traders use both in their strategies. The new futures also have the potential to pull the trade away from Cboe’s exchange.

Think we missed something? Let us know in the comment section below.

  1. James says:

    This is can be used as a good tool to track the portfolio volatility. Looking forward to using this

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