Cboe to Launch S&P 500 Equal Weight Index Options
The equity market has become increasingly concentrated. Cboe Global Markets, a leading global network for derivatives and securities trading, announced plans to introduce options on the S&P 500 Equal Weight Index (EWI) starting April 14, 2025, pending regulatory approval.
The announcement was made at the 50th International Futures Industry Conference held in Boca Raton, Florida. These S&P 500 EWI options will be cash-settled and based on one-tenth of the value of the S&P 500 EWI, which serves as the equally weighted counterpart to the traditional S&P 500 Index.
Features of the S&P 500 Equal Weight Index
- The index includes the same constituents as the capitalization-weighted S&P 500 Index.
- Each company is assigned a fixed weight of 0.2% of the total index at every quarterly rebalance.
- The equal-weight structure aims to offer diversified exposure across all constituents.
As of December 20, 2024, the bottom 400 companies represented roughly 80% of the S&P 500 EWI, while in the conventional S&P 500 Index, they accounted for only 26%.
“The equity market’s increasing levels of concentration have led market participants to search for new tools to manage risk and diversify their exposure,” said Rob Hocking, Global Head of Product Innovation at Cboe.
Conclusion
The introduction of S&P 500 EWI options is designed to help traders and investors access a more balanced approach to U.S. large-cap equity exposure.
Author’s summary: Cboe plans to launch cash-settled S&P 500 EWI options in April 2025, offering investors a tool for risk diversification and more balanced equity exposure.