Cboe Global Markets Explained — The Options and Volatility Exchange
What Is Cboe?
The Chicago Board Options Exchange was founded on April 26, 1973 — just weeks after Fischer Black, Myron Scholes, and Robert Merton published the foundational papers on options pricing (the Black-Scholes model). It was the first exchange to offer standardized, listed options contracts. Before Cboe, options were traded over-the-counter with inconsistent terms and limited liquidity.
In 2017, the company rebranded to “Cboe Global Markets” to reflect its expansion beyond options into equities, ETFs, futures, and international markets. Today, Cboe is a publicly traded company (ticker: CBOE) with operations spanning North America, Europe, and Asia-Pacific.
What Does Cboe Trade?
| Product Category | Key Products | Volume Context |
|---|---|---|
| Equity options | Options on individual stocks | Largest U.S. options exchange by volume |
| Index options | S&P 500 (SPX), Russell 2000, VIX options | SPX options are the most traded index options globally |
| VIX products | VIX futures & options | VIX options are among the most active in the world |
| U.S. equities | Stocks via Cboe BZX, BYX, EDGX, EDGA | Handles ~15% of all U.S. equity trading |
| ETFs | Cboe BZX lists ETFs as an exchange | Growing ETF listing venue |
| European equities | Cboe Europe | Largest pan-European equity exchange |
Cboe and the VIX
Cboe’s most significant contribution to financial markets is the VIX Index — the volatility index commonly called the “fear gauge.” Cboe introduced the VIX in 1993 and launched VIX futures in 2004 and VIX options in 2006. These products created an entirely new asset class: tradable volatility.
VIX options and futures are exclusively traded on Cboe’s platforms. The daily volume in VIX options often exceeds 500,000 contracts, making them among the most liquid options in the world. This franchise gives Cboe a significant competitive moat — you can’t trade VIX anywhere else.
Cboe’s SPX Options Franchise
S&P 500 Index (SPX) options are Cboe’s other crown jewel. Unlike options on the SPDR S&P 500 ETF (SPY), SPX options are cash-settled and receive favorable tax treatment under IRS Section 1256 (60% long-term / 40% short-term capital gains, regardless of holding period). This makes SPX options the preferred vehicle for institutional hedging and sophisticated options strategies.
Cboe also introduced 0DTE (zero days to expiration) options on the SPX, which have exploded in popularity since 2022. These ultra-short-term options now account for over 40% of daily SPX options volume.
Cboe vs. NYSE vs. Nasdaq
| Feature | Cboe | NYSE | Nasdaq |
|---|---|---|---|
| Primary focus | Options & volatility | Stock listings & trading | Stock listings & trading |
| Founded | 1973 | 1792 | 1971 |
| Signature product | VIX, SPX options | Blue-chip stock listings | Tech stock listings |
| Trading style | Electronic | Hybrid | Electronic |
| Equity trading | ~15% of U.S. volume (4 exchanges) | ~25% of U.S. volume | ~20% of U.S. volume |
Key Takeaways
- Cboe is the world’s largest options exchange, founded in 1973 as the first venue for listed options.
- It created and exclusively operates the VIX Index — Wall Street’s “fear gauge” — and VIX futures/options.
- SPX (S&P 500) options are Cboe’s other franchise: cash-settled, tax-advantaged, and institutionally preferred.
- Cboe also runs four U.S. equity exchanges handling ~15% of total U.S. stock volume.
- The explosion of 0DTE options has made Cboe increasingly central to short-term market dynamics.
Frequently Asked Questions
What is the difference between Cboe and the NYSE or Nasdaq?
The NYSE and Nasdaq are primarily known as stock listing and trading venues. Cboe’s primary business is options and volatility products, though it also handles significant equity trading through its four stock exchanges. The VIX and SPX options franchises give Cboe a unique position that the other exchanges don’t replicate.
Can retail investors trade on Cboe?
Yes. Retail investors access Cboe products through their brokerage accounts — you don’t interact with the exchange directly. When you buy a call option or put option through your broker, the order is often routed to Cboe for execution. SPX and VIX options are available at most major brokerages.
What are 0DTE options?
0DTE (zero days to expiration) options are options contracts that expire on the same day they’re traded. Cboe introduced daily SPX expirations, meaning there’s an SPX expiration every trading day. These ultra-short-term options are popular for day trading, hedging, and speculation, but they carry extreme risk due to rapid time decay.
Why are SPX options tax-advantaged?
Under IRS Section 1256, broad-based index options like SPX are taxed at a blended rate: 60% of gains are taxed as long-term capital gains and 40% as short-term, regardless of how long you held the position. For high-income traders, this can result in significant tax savings compared to equity or ETF options, which are taxed at ordinary short-term rates if held less than a year.
Is Cboe the same as the CBOT?
No. The CBOT (Chicago Board of Trade) is a futures exchange now owned by the CME Group. Cboe (Chicago Board Options Exchange) is a separate company focused on options. Both originated in Chicago but have always been distinct entities serving different parts of the derivatives market.