CBOE Definition and Explanation – What is behind it?

What is the CBOE? – Explanation & Definition

The New York Stock Exchange, the Frankfurt Stock Exchange and the Tokyo Stock Exchange – stock exchanges that I’m sure everyone has heard of. However, there are countless other exchanges around the world, some smaller and some larger. One of the larger ones is definitely the CBOE. But what is the CBOE anyway, which markets and products are tradable and what are the trading hours. Answers are provided in the following article.

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What is behind CBOE?

The abbreviation CBOE stands for Chicago Board Options Exchange. The exchange was founded in 1973 as a subsidiary of the Chicago Board of Trade (CBOT) and is thus considered the first marketplace for trading listed options.

In the meantime, both the product offering and the trading volume have increased enormously. This makes the CBOE not only the largest US options exchange, but also one of the largest options exchanges worldwide.

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Products are developed and new markets or market models are also created or adopted. These include the following:

  • First alternative trading venue to traditional markets
  • First pan-European multilateral trading facility (MTF)
  • First electronic communications network (ECN) for the institutional foreign exchange (FX) market

This was followed in 2017 by CBOE’s acquisition of the U.S. exchange BATS Global Markets. This expanded the product range and trading in European as well as US equities, ETFs and global currency products was now possible.

In the following years, CBOE acquired a number of other companies. These included, for example, three data analytics firms and BIDS Trading, the largest independent ATS (Alternative Trading System) for block trading in the United States.

In addition, CBOE has been able to expand into North America as well as Japan and Australia through the acquisition of MATCHNow and Chi-X Asia Pacific

These markets are tradable on CBOE

The acquisition of several companies and expansion into different countries has increased the variety of tradable markets. In addition to U.S. options and U.S. equities, numerous other markets have been added over the years. These include EU equities, US futures and Forex. Here is an overview of the tradable markets:

  • US equities
  • EU stocks
  • US Options
  • US futures
  • Foreign Exchange (Forex)
  • EU derivatives
  • Indices
  • Canadian Stocks

CBOE operates four US equity exchanges: BZX Exchange, BYX Exchange, EDGA Exchange and EDGX Exchange. This results in an average daily trading volume of approximately $86 billion, making CBOE the largest U.S. exchange.

In Europe, CBOE also operates CBOE Europe Equities, the largest exchange in Europe in terms of traded value. Thus, through the exchanges in the UK and the Netherlands, trading in over 6000 securities is possible on 18 markets. The average trading volume is 7.7 billion euros per day.

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In addition, there is the largest options exchange in the U.S., a U.S. futures exchange, and CBOE FX – the first “Electronic Communication Network” (ECN) for the institutional forex market. Its customer base is said to include more than 220 banks, market makers, hedge funds and institutions.

CBOE also operates CBOE Global Indices, one of the leading providers of derivatives-based indices. Currently available for trading are more than 350 derivative-based indexes, which traders can compare in performance using interactive charts and tools.

These products can be traded at CBOE

The selection of different products also plays an important role. In these numerous markets that are tradable at CBOE, there are various asset classes or financial products that traders can trade. Here is an overview:

  • Options on US equity indices
  • Derivatives on volatility products
  • Credit and interest rate futures for companies

On the one hand, options on US stock indices are part of the product range. These include, for example, well-known indices such as the Dow Jones and the S&P 500. And options on mini-indices are also available for trading.

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On the other hand, traders can trade options, futures and mini futures on the VIX volatility index. This index tracks the expected range of fluctuation of the S&P 500. In addition, the range offers credit and interest rate futures for companies. These futures are based on indices that measure the performance of U.S. high-yield and investment-grade corporate bonds.

Trading Hours at CBOE

The trading hours of an exchange differ depending on the time zone. CBOE is located in the CST time zone, which is Central Standard Time (North America). There, regular trading hours for stocks and options are between 8:30 am and 3:00 pm.

According to U.S. Eastern Standard Time, this corresponds to the time between 9:30 a.m. and 4:00 p.m. and in our time zone (CET or CET) between 3:30 p.m. and 10:00 p.m.. However, traders can trade some futures and options almost all day. These include agricultural and currency derivatives, among others.

Learning opportunities at CBOE

However, the CBOE exchange not only offers trading in numerous securities on markets worldwide, but also has an interesting learning offer for its customers. These can participate in both training and instructional sessions. Also available are short infovideos on various topics, newsletters and short reports, such as weekly reviews or analyses.

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In addition, a number of other services are also being planned. Among them accreditations, learning tools, certificates, conferences and consultations.

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Conclusion: Broad product range

Founded in 1973, the CBOE stock exchange has grown over the years and expanded worldwide. In the process, the range of different investment products has also increased. As a result, every investor can find the financial instrument to trade that suits his or her needs – from private investors to financial service providers and institutional investors.

In addition, traders can find detailed and useful information and analyses on the website. For example, the weekly review also offers differentiated views that the trader himself may not yet have had in mind.

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