Cheddar News' Courtney Sturgeon reports live from the options trading floor to break down the busy earnings week ahead for big tech, and the launch of Cboe's 1-Day Volatility Index (VIX1D).

Cboe Launches 1-Day Volatility Index

This next segment is brought to you by CBO defining markets through innovation, technology and trading solutions. We're going live now to the largest Options Exchange in the US. Reporter Courtney Sturgeon joins us live from the Chicago Board Options Exchange for a new Cheddar business segment. Courtney so great to have you on the show. Thanks for joining us. What can you tell us about what we're seeing in the market? Thanks for having me, Chloe. Welcome to Chicago. There's a 50 year history of options trading that began right here at CBO and that's where we're going to be following options. That is that gives the purchaser the right not the obligation to sell or buy a stock at an agreed upon price in the future. And that point in time in the future is key here. It's the expiration on options contracts that makes an exchange network like CBO, a hub of information. And we're going to be covering all of that here in the segment more on that in a minute. But in the meantime, it's a busy week here on the options trading floor as tech companies to watch include Amazon, Microsoft Meta and Google as you mentioned before too. Now we're seeing that Google's parent company alphabet is seeing high put option premiums ahead of its earnings report due out later today. Microsoft also due out today is just one week from seeing an unusually large buy of a block of call contracts that's to expire in September. So what's driving this uncertainty? Well, in part, it's the race to A I that's pressuring companies to transform their products while also facing mass layoffs and an uncertain economic future. So this kind of uncertainty often leads to high volatility in markets right before earnings. We're not seeing too high of that in the options, trading markets right now. But it was here that at CBO 30 years ago, the original Vix index launched and changed how investors measure volatility. And once again, CBO is adding to its portfolio announcing just yesterday that the launch of its CBO one day volatility index, a new non tradable volatility index that estimates the day's expected market volatility. So what this means is that on days of heightened volatility, the Vix one day is expected to reflect short term impacts according to some really great context there. How will this change the strategy of traders on the floor over there? Well, it's a new product that's announced, you know, like I said just yesterday. So as with any new platform, traders will have to learn and implement how it works best for their portfolios. But it's important to note that it's likely to behave more volatile given its nature. And because of the time frame and news events that will come into play depending on that particular day. And in what kind of situation might a trader find this useful? That's a great question, Chloe. So take for example, the recent collapse of two US banks in early March, the Vix rose more than 38% while the VIC one day which was just in testing at the time rose 162% over this period. Now on days of heightened volatility, the VICS one day is designed to reflect these short term impacts. We've heard from CBO executives who say this came out of a need for a short term measurement of expected volatility. And that is a tool that's going to keep growing for groups of investors that are utilizing same day trading strategies in Chicago. I'm Courtney Sturgeon, Courtney Sturgeon in Chicago. Thank you so much for that insight and for your time this morning, that's our reporter. If you want to learn more about options trading visit CBO dot com.