US derivatives exchange Cboe Global Markets is expected to launch a set of Mini-Russell 2000 Index options on 1 March, subject to regulatory approval.
The mini options share the same contract terms as standard Russell 2000 Index options but are one-tenth the size, offering clients direct access to the index in a more manageable and cost-effective contract.
Due to their smaller notional value, the options offer investors more flexibility and precision when managing US small-cap equity market risk or when allocating among accounts.
“The Russell 2000 Index continues to be one of the most widely followed US small cap benchmarks, and we are pleased to extend its utility to a broader universe of investors by offering Mini-Russell 2000 Index options,” said Arianne Criqui, head of derivatives and global client services at Cboe Global Markets.
“Delivering the features of index options trading in a more manageably sized and flexible vehicle, Mini-Russell options could serve as an alternative to comparable ETF options and a valuable tool for investors to potentially increase yields and hedge risks efficiently.”
Alongside the launch, Cboe is also continuing to expand its index products offerings that feature a mini contract, including Mini Cboe Volatility Index futures and Mini S&P 500 Index options.
The mini options are designed to appeal to a range of investors including new index options traders, sophisticated retail traders managing an individual portfolio, and small- to mid-sized institutional investors seeking to execute small-cap options-based strategies.
Cboe recently confirmed its plans to launch an improved exchange traded product (ETP) incentive scheme for market makers that aims to provide deeper liquidity for listed ETPs by allowing market makers to opt-in to receive a higher payment per share than the flat default for ETPs with an average daily volume of one million or more shares.