What does CBOE stand for?
The CBOE was founded in 1973, and its acronym originally stood for Chicago Board Options Exchange. In 2010, the CBOE changed its name to Cboe Global Markets, Inc., but its ticker symbol remains CBOE.
The CBOE is the world’s largest options exchange. The exchange now includes an educational department (The Options Institute) and a clearinghouse for all options trades within the United States (the OCC).
CBOE Volatility Index
The CBOE Volatility Index, or VIX, is an index created by the CBOE that measures the 30-day implied volatility of the S&P 500 index options. The VIX is often called the "fear index" or the "fear gauge" because it tends to spike when investors are worried about the stock market.
The VIX is calculated using a complex formula that considers the prices of various S&P 500 index options. The VIX is meant to be a forward-looking indicator, meaning that it predicts future volatility rather than past volatility.
CBOE Options Rulebook
The CBOE Options Rulebook is the rulebook that governs options trading on the CBOE. The Rulebook contains all the rules and regulations for options trading on the exchange.
The Rulebook is divided into four parts:
- Part I - General Regulations
- Part II - Trading Procedures
- Part III - Market Maker Obligations
- Part IV - Capital and Margin Requirements.
The Rulebook covers everything from the trading process to fees, market maker obligations, and margin requirements for options traders.
CBOE put-call ratio
The put-call ratio is a ratio that measures the number of put options traded relative to call options. The put-call ratio can be used to gauge market sentiment, as high put/call ratios typically indicate bearishness while low put/call ratios tend to signal bullishness.
There are two main types of put/call ratios: the total put/call ratio and the equity put/call ratio.
The total put/call ratio measures the amount of all put options traded relative to all call options traded. This includes options on stocks, ETFs, indexes, etc.
The equity put/call ratio only looks at put and call options on stocks. This ratio is a more accurate gauge of stock market sentiment, as it excludes other types of options (such as index options) that can be influenced by factors other than the underlying stocks.