Cboe Global Markets (Cboe: CBOE), the world's leading derivatives and securities exchange network, and Robinhood Markets Inc. today announced at the HOOD Summit in Miami, Florida, Robinhood's upcoming launch of Cboe's index options on its platform.
For the first time, Robinhood customers will soon be able to trade index options - including Cboe's flagship S&P 500 Index (SPX) options, Cboe Volatility Index (VIX) options, Russell 2000 Index (RUT) options and Mini SPX (XSP) options - expanding their trading capabilities on its platform.
Cboe's proprietary suite of index options will provide Robinhood's customers potential new ways to gain broad U.S. market exposure, hedge against U.S. large-cap and U.S. small-cap equity market volatility, generate income and capitalize on market movements1 on Robinhood's platform. Index options offer the benefits of cash-settlement (accounts are debited or credited in cash; there is no physical transfer of shares) and European-style exercise (options expire on their expiration date; there is no risk of early assignment).
"The rise of the retail investor is one of the greatest forces reshaping financial markets today," said Dave Howson, Global President at Cboe Global Markets. "Retail traders have expanded their financial knowledge and trading experience in recent years to become much more sophisticated, and now, they are seeking new opportunities to further elevate their trading strategies. Cboe's proprietary index options are among some of the world's most popular, liquid and actively traded options products, which we believe will be a welcome addition to the retail trader's toolkit. Cboe's index options have long been used by institutional investors to manage risk and build wealth. Now, with Robinhood offering index options to its growing user base, we are excited even more investors may access the utility of our products."
Robinhood makes Cboe Global Indices Feed, which provides real-time index values for products like SPX, VIX and RUT options, available to its customers. The feed may offer additional data to support customers when making their own trading decisions.
"Robinhood continues to deliver innovative and intuitive trading solutions that empower retail investors, and our collaboration with Cboe aligns perfectly with that mission," said Steve Quirk, Chief Brokerage Officer at Robinhood. "As our customers have grown, they have asked us for access to more advanced assets including index options, which allow them to diversify their portfolio and better manage risk. Adding index options to Robinhood is a natural extension of our product offering and has been one of the most requested asset classes by our customers. This will be another powerful tool to help them navigate their financial future."
Demand for options trading has risen among both retail and institutional investors who may be seeking tools to manage risk and capture market opportunities. In 2023, total U.S. options volumes exceeded 11 billion contracts, marking the fourth consecutive year of record volumes and a 126% increase since 20192. Average daily volumes this year through third-quarter 20243 was 47 million contracts, an 8% increase compared to the same period last year.
Cboe's proprietary product suite has similarly seen increasing investor participation, with average daily volumes reaching a record high of 4.2 million contracts during third-quarter 2024, up 13% from third-quarter 2023. In response to growing investor demand, Cboe's Options Institute, a leader in options education for more than 35 years, has expanded its offerings to include free online courses, webinars, interactive tutorials and insights from top market experts and academics, all tailored to help retail traders - whether beginners or seasoned investors - enhance their understanding of index options and build the knowledge they need to trade with confidence.
"As we move through 2024, one theme is clear: the need for robust risk management tools has never been greater and we see both institutional and retail participants, domestic and international, increasingly turning to options," said Catherine Clay, Global Head of Derivatives at Cboe Global Markets. "We see that investors are trading options with both longer and shorter durations and utilizing various strategies - whether hedging event risk, systematically selling call and put spreads to generate income, or trading options within a shorter time horizon to capture intraday moves. The U.S. options market has never been more vibrant and robust, and, as the options industry leader, Cboe remains committed to providing all investors access to this deep and growing liquidity pool."