One of the most frequent questions I hear is – how is the CBOE’s buy-write index doing year-to-date?
The charts below provide the percentage changes for 13 indexes in the first quarter of 2014. Both the CBOE S&P 500 2% OTM BuyWrite Index (BXY) and the CBOE S&P 500 PutWrite Index (PUT) sell S&P 500 (SPX) index (options) every month, and both indexes rose 2.9% in the first quarter. The quarterly gains for the BXM Index (2.4%) and BXR Index (2.3%) were higher than then gains for the S&P 500 Index (1.8%), MSCI EAFE Index (0.7%) and MSCI Emerging Markets Index (-0.4%).
One takeaway from the charts with blue bars below is the fact that strategies that write index options can take in premium income, and they do have the potential to add value in times when stock market performance is sluggish. In addition, options-based indexes such as the BXM, BXR and PUT often have had much less volatility than the corresponding stock indexes. For more information and studies on benchmark indexes, please visit www.cboe.com/benchmarks.
The chart with orange bars above shows the % change in volatility indexes that are not investable; the VIX Index and VXTYN indexes both rose slightly in the 1st quarter. For more information please visit www.cboe.com/volatility for charts on more than 25 volatility indexes.