MIAX Options Announces SPIKES Index Launch in an Attempt to Reduce CBOE’s Volatility Monopoly

According to a recent report released by Bloomberg on February 6, the VIX Copycat MIAX Options wants to break Cboe’s Monopoly on volatility products. This is why MIAX Options will be launching options called the SPIKES Index.

At the moment, the Cboe’s VIX provides a robust market for options and futures at the Chicago-based exchange. In the past, different attempts to compete with it failed completely. Clearly, MIAX Options does not have an easy task ahead. The daily volume for VIX options averaged around 550,000 contracts at Cboe during the last months.

This is a lower-cost alternative to the VIX. It has cheaper fees that allow investors to trade the MIAX contracts. The chief executive officer of the company, Simon Ho, said that it will be lowering the cost of doing business significantly. At the same time, it will also be competing in terms of quality, price, and innovation.

SPIKES was created with Bats Global Markets Inc. This platform was bought back in 2017 by the Cboe. During the last years, Ho was talking with different market participants about what they need, what they like and what they do not like about the volatility products that are currently offered.

The Cboe mentioned in a recent statement:

“Any trading potential for VIX-like products would depend on traders being able to hedge those products likely using our liquid market for VIX futures and options. We would expect to benefit from the hedging flow that would potentially result from other volatility-based products, reinforcing our confidence that the VIX Index will remain a premiere volatility benchmark.”

In order to calculate the VIX, they take into account out-of-the-money S&P 500 options. SPIKES is derived from options on the SPDR S&P 500 ETF Trust. This is the largest ETF in the world.


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