CME Group is set to launch weekly foreign exchange options contracts that expire on Tuesdays and Thursdays, allowing traders to hedge volatility around specific market events.
The new contracts – for G5 currencies – will be available on both CME’s electronic central limit order book (Clob) and off screen via bilateral block trades, from December 5. The move expands the exchange’s existing weekly FX options contracts that expire every Monday, Wednesday and Friday, giving traders the flexibility to buy and sell vol on any day of the week.
Around 60% of all FX options traded on its exchange have tenors of one month or less, and 25% are sub-one week, says Chris Povey, head of FX options at CME Group. As a result, he says the new contracts are a natural fit for…