Options on OVX Index Launch Tuesday, April 10th – Risk Management and Implied Volatility for Options on Oil Fund

On Tuesday April 10th CBOE is launching trading of options on the CBOE Crude Oil ETF Volatility Index (ticker – OVX), a key measure of the market’s expectation of 30-day volatility of crude oil prices that applies the VIX® methodology to United States Oil Fund (USO) options spanning a wide range of strike prices. www.cboe.com/ovx

BIG % MOVES FOR OVX INDEX

The OVX spot index rose by more than 30% on three trading days – May 5, 2011, August 8, 2011, and August 18, 2011.

The table below presents the monthly percentage moves for the S&P GSCI Index, crude oil, and OVX spot index in 2008.  Note that in October 2008 crude oil spot was down 32.6% and the OVX spot index rose 35.3%.  Investors could explore the possibility as to whether the OVX options could be used for diversification and risk management purposes.

Please note that indexes are not directly investable.

OVX INDEX SINCE MAY 2007

The historical date on the OVX Index go back to May 2007.  The peak daily close for OVX was 100.42 in 2008.  www.cboe.com/ovx

 

OVX INDEX OFTEN HIGHER THAN VIX INDEX

Since May 10, 2007, the average daily closing values have been 41.6 for the OVX Index and 26.2 for the well-known CBOE Volatility Index® (VIX®).  www.cboe.com/ovx

CRUDE OIL SPOT PRICE SINCE MAY 2007

Please visit www.cboe.com/ovx for more information and charts.

 

The posts on this blog are opinions, not advice.
Please read our disclaimer for Indices.

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