The CBOE Futures Exchange, a subsidiary of the Chicago Board Options Exchange, said on Wednesday it plans to offer a new product tied to the so-called VIX .VIX, Wall Street's favorite barometer of investor fear.Trading in CBOE mini-VIX futures, a contract which will be one-tenth the size of the standard CBOE VIX futures contract, will debut on Monday, the CFE said.
CBOE, the largest U.S. options exchange, offers volatility benchmarks based on a variety of major stock indexes and CFE lists four volatility futures contracts with the VIX futures being the most active.
The popular VIX is based on real-time Standard & Poor's 500 Index .SPX options and reflects investors' consensus view of future expected market volatility of the S&P benchmark.
CFE said the smaller VIX futures contract with lower margins may be more manageable for a variety of users.
It is expected to attract sophisticated investors and institutions "who are looking for a smaller-scale play on implied volatility that's independent of the direction and level of stock prices," said CFE Managing Director Andrew Lowenthal in a statement.
The contract can also be used as a "way to hedge equity returns, diversify portfolios, and spread implied against realized volatility," he said.
Traders in VIX options, which are priced off VIX futures, are expected to benefit because they can now hedge with a like-sized futures contract, said David Graff, senior trader at Wolverine Trading, a firm that will be making markets when trading begins.
The new cash-settled CBOE mini-VIX futures contract .VM initially will list March, April and May serial futures months, which coincide with CBOE's S&P 500 nearby options months.

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