In response to the booming market demand, CBOE has expanded the zero-date option contract period for the Russell 2000 Index to every business day.

Zhitong App has learned that the Chicago Board Options Exchange (CBOE), the world's largest options exchange, plans to expand the expiration dates of zero-day options contracts linked to the Russell 2000 Index to every Tuesday and Thursday. Currently, the exchange only offers options contracts for this index on Mondays, Wednesdays, and Fridays, while zero-day options linked to the S&P 500 Index are available for trading every trading day.

Catherine Clay, Executive Vice President and Global Head of Derivatives at CBOE, stated that the new product will allow options traders to replicate the daily strategies they have been using on other indices. Clay said in an interview, "When they find something that works effectively in the S&P 500 Index, they want to do the same thing in the Russell 2000 Index."

The expanded expiration dates will apply to both the Russell 2000 Index and the E-mini Russell 2000 Index options and will take effect on January 8th next year. Competitor Chicago Mercantile Exchange (CME) already launched E-mini S&P 500 Index weekly options last year and expanded them to every business day.

It is reported that zero-day options trading linked to the S&P 500 Index has surged to record levels this year, prompting the exchange to actively seek further progress based on this success. However, the increased demand has also brought controversy. There is growing concern that this product may exacerbate market volatility, and some traders even attribute the Wednesday decline in US stocks to zero-day options.

Rob Hocking, Head of Product Innovation at CBOE, said there was a lot of concern when trading volume in zero-day options started to increase. However, he pointed out that CBOE took the time to educate market participants and "help people understand the reasons and ways to use these products."

Options trading volume has been soaring, and short-term investment products are becoming increasingly popular. In response, CBOE has expanded its daily expiring S&P 500 Index options products by extending the expiration dates to every Tuesday and Thursday in the first half of 2022.

Retail investors have been choosing options, seeing it as a relatively inexpensive way to bet on the stock market. Institutional investors are also profiting from it, as options can provide a lower-cost way to limit losses during market volatility.

However, some analysts, including Marko Kolanovic of JPMorgan Chase, have warned that the popularity of this product could lead to market shocks. CBOE cited a study it conducted earlier this year that found little evidence to suggest that trading in these derivatives is disrupting the stability of the underlying market.

The Russell 2000 Index is a benchmark for measuring the performance of US small-cap stocks. By adding expiration dates on Tuesdays and Thursdays, investors will be able to manage their exposure to US small-cap stocks and develop investment strategies more accurately around market events.

Hocking stated that the Russell 2000 Index shares similar characteristics with the S&P 500 Index, as both are cash-settled indices. "We want to provide the same options across different benchmarks." According to data from CBOE covering the entire market, it is expected that by the end of 2023, the total volume of options trading in the United States will reach a new annual high, surpassing the 10.3 billion contracts in 2022, breaking records for the fourth consecutive year. This growth is partly attributed to the trading of short-term US index options.

CBOE data shows that in 2023, options contracts expiring in one day or less will account for about 36% of the total flow of US index options, compared to 15% in 2020. For options linked to the Russell 2000 index, contracts expiring in one day or less will account for 17% of the total trading volume. Clay and Hocking expect an increase in trading volume on Tuesdays and Thursdays.

Hocking said, "The industry has seen a trend towards more refined and frequent risk exposure. Therefore, we are exploring more ways to meet this demand."