As I discussed earlier this month in VIX Binary Options, the CBOE is now offering binary options on the VIX. The first out of the gate was VIX binary calls, which were launched in July. Starting today, there are now VIX binary puts.
The CBOE noted the following about their new binary options:
"CBOE's binary options have experienced impressive volume early on, reaching as much as 10,000 to 12,000 contracts on some days and averaging 2,500 contracts daily during September. CBOE has seen strong institutional use of these contracts. Based on customer feedback, we fully expect the addition of puts to spur more brokers-dealers to come on-line to handle binaries, thus enabling more individual investors to access these products.
The Designated Primary Market Maker (DPM) for binary options on the S&P 500 Index (ticker symbol BSZ) is Chicago Trading Company; the DPM for binary options on the CBOE Volatility Index (ticker symbol BVZ) is Group One Trading, L.P. "
I feel obliged to add that so far the success of the binary options has been more the result of the SPX options than the VIX options, but if you are one of those who does not expect to see a VIX in 30s for very long, VIX binary puts might be something to investigate. I can only hope that the bid-ask spreads are low enough to make these viable trading instruments.