Cboe Global (CBOE) to Introduce S&P 500 ESG Index Options

Cboe Global Markets, Inc. CBOE is set to introduce options on the S&P 500 ESG Index, as part of its plans to expand its suite of products tied to S&P Dow Jones Indices. Subject to regulatory review, the new options are scheduled for launch on Sep 21, 2020.

S&P 500 ESG Index is designed to provide improved Environmental, Social, and Governance (ESG) representation while offering a risk and return profile similar to the S&P 500. Using S&P DJI ESG Scores and various ESG exclusions, the index ranks and selects eligible companies, targeting 75% of the market capitalization in each S&P 500 GICS industry group.

S&P 500 ESG Index Options are exchange-traded European exercise cash settled options contracts based on the S&P 500 ESG Index. The position limit of the options is 25,000 contracts on the same side of the market, with no more than 15,000 contracts in the near-term expiration month. The exercise limit is 15,000 contracts.

The S&P 500 ESG Index is a broad-based, market cap-weighted index that measures the performance of securities meeting sustainability criteria, while maintaining similar overall industry group weights as the S&P 500 Index.

Cboe Global is committed to benefit its participants and drive the global marketplace forward through product innovation, leading edge technology and seamless trading solutions. S&P 500 ESG Index options launch is intended to boost sustainability offerings. They are expected to have particular utility for market participants seeking an effective way to gain exposure to or hedge the U.S. equity market that meets sustainability criteria.

The launch came in view of the fact that many market participants around the world are increasingly pursuing a sustainable investing agenda, aligned with their own ESG preferences.

The addition of the Cboe S&P 500 ESG Index options will furnish an additional tool to the global participants of all sizes, which will provide them with ESG representation within their portfolios. This will allow them to trade and manage their risk preferences effectively. The market participants will also get the advantage of cash settlement and European-style exercise.

The S&P 500 Index is an index comprising 500 large-cap U.S. listed companies. The SPX options that Cboe offers on the S&P 500 Index contribute substantially to volumes and transaction fees of Cboe Global. SPX options are 10 times the size of most exchange traded fund (ETF) option products linked to the S&P 500 Index. SPX is prized by institutional investors primarily for its leveraging power and for its liquid markets.

Shares of this largest exchange holding company, in terms of offering cutting-edge trading and investment solutions to investors globally, have underperformed the industry in the past year. The stock has lost 22.4% against the industry’s increase of 1.8%. Nevertheless, its diversified product portfolio and strong liquidity position should drive the stock going forward.


The stock carries a Zacks Rank #4 (Sell).

Stocks to Consider

Some better-ranked stocks from the finance sector include MarketAxess Holdings Inc. MKTX, OTC Markets Group Inc. OTCM and Equitable Holdings, Inc. EQH, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

MarketAxess operates an electronic trading platform that enables fixed-income market participants to trade corporate bonds and other types of fixed-income instruments worldwide. It surpassed estimates in each of the last four quarters, with the average earnings surprise being 2.49%.

OTC Markets engages in the financial market business in the United States and internationally. It surpassed estimates in three of the last four quarters, with the average earnings surprise being 10.54%.

Equitable Holdings operates as a diversified financial services company worldwide. It surpassed estimates in three of the last four quarters, with the average earnings surprise being 13.79%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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