Cboe wants to turn VIX into a never-ending trade
Reported by CoinDesk · AI-assisted summary by ChikoCorp AI News Desk
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Summary
Cboe is exploring the introduction of perpetual futures contracts on the VIX, the stock market’s volatility index, although no contract details or regulatory filings have been made yet. Perpetual futures, popularized by the crypto industry and proposed by economist Robert Shiller in 1993, differ from traditional futures by lacking an expiry date, using funding rates to maintain price alignment with the underlying index. This development could bring a new product format to Wall Street’s volatility markets.
Why it matters
This innovation might draw more traders and market makers into the volatility derivatives space, potentially improving liquidity and pricing efficiency between VIX products and related S&P 500 derivatives. It shows an increasing convergence of traditional finance and crypto market structures. The source highlights ongoing challenges including hedge costs and basis risks that perpetual futures do not eliminate.
Key context
The VIX measures expected 30-day volatility of the S&P 500, rising during market downturns, earning it the nickname "fear gauge." Existing VIX derivatives like futures and options involve expiration, creating rollover costs that reduce returns—an issue also seen in bitcoin futures ETFs. Perpetual futures avoid expiration, but there is no physical "spot" asset for VIX, complicating hedging for market makers.
Key numbers and entities
Cboe is the exchange exploring VIX perpetual futures. Martin Lee from DWF Labs and analysts at Marex Solutions provided commentary. Gate exchange currently offers illiquid VIX/USDT perpetual swaps, and Hyperliquid has bitcoin VIX futures linked to a Volmex index.
What remains unclear
Details about the potential contract specifications, timeline for Cboe’s perpetual VIX futures launch, and how funding rates would practically function in the absence of a cash VIX spot market remain unspecified. The overall impact on costs and market behavior, as well as regulatory considerations, have yet to be clarified.