The Chicago Board Options Exchange (NASDAQ:CBOE) may be eyeing up an index based on Apple Inc. (NASDAQ:AAPL) futures according to statements made by the president of the company earlier today. The company’s VIX index is used as the best measure of volatility on the market and is used daily by investors. The news was reported by Reuters earlier today.
The president is now eyeing up an expansion of the products to single stock volatility indexes and is eyeing up Apple as a possibility. The president stated that he would not be surprised “if I saw us launch in the near future – futures on Apple VIX.” Given the popularity of Apple’s stock a new way to trade on the stock’s success would no doubt be popular. Last year the firm created volatility indexes on several highly active stocks including Apple, International Business Machines Corp. (NYSE:IBM), Amazon Inc. (NASDAQ:AMZN), Google Inc. (NASDAQ:GOOG) and Goldman Sachs Group (NYSE:GS).
The company’s volatility ETF products have been seen as a driver of growth in recent times. That view has come under pressure in recent months as problems with the ETFs based on volatility mount up and investors are becoming increasingly wary of the products. That won’t stop the CBOE from launching more of the funds according to the president’s statements. They’ve recently expanded their line of products and will continue to do so as the market demands.
Since the beginning of the year the firm has released three new products relying on volatility indexes to judge their value. The funds are called the CBOE Emerging Markets ETF Volatility Index, the CBOE Brazil ETF Volatility Index and the CBOE Crude Oil Volatility Index. Each trades on the volatility of the assets in their titles.
If the product based on Apple comes to pass the index will certainly be interesting to follow though with all other ETFs it is a risky move to invest in. Problems with the VIX so far this year should be taken into account before investing in one of the CBOE’s volatility products.
The SEC is becoming increasingly wary of ETFs based on volatility and made it clear that it will investigate Credit Suisse (NYSE:CS) over trading in its volatility index the TVIX. An index based on Apple will face at least as many problems though quite possibly more.
An Apple volatility ETF would attract attention from many outside the investment arena that usually handles them. The inclusion of less experienced and less able investors in such an instrument could be disastrous.
