Cboe Explores Perpetual Futures for VIX Without Expiration
The Chicago Board Options Exchange (Cboe) is exploring perpetual futures based on the Volatility Index (VIX), aiming to transform Wall Street's fear gauge from a product with an expiration date into a continuously held contract. The project is still in its early stages, with no contract specifications, launch date, or regulatory filings available.
Rob Hocking, head of Cboe's global derivatives business, stated at a derivatives market structure conference in New York on October 1 that they will advance this product once the regulatory framework is clearer, specifically mentioning that VIX is one of the directions being considered. He noted that there is currently no way to trade VIX spot, and the market has been asking how to invest in spot VIX, suggesting that perpetual futures could be a good solution.
The VIX measures the implied volatility of S&P 500 options for the next 30 days. When the market declines, demand for protective options increases, pushing the index higher, hence it is referred to as a fear gauge. Currently, tradable products include VIX futures, options, and exchange-traded products tracking the index, but there is no direct trading of the index points. Standard futures must be closed and reopened after expiration, resulting in repeated costs and spreads during rollovers.
Perpetual contracts eliminate expiration dates, anchoring prices near the reference index through funding fees between longs and shorts, with leverage amplifying both profits and losses. Market makers face hedging difficulties because traders cannot directly buy VIX itself. Economist Robert Shiller proposed perpetual futures in 1993, which later became mainstream in the crypto market.
The crypto exchange Gate has a VIX/USDT perpetual, but it has low trading volume. Hyperliquid has launched futures linked to the Volmex Bitcoin implied volatility index. Martin Lee, head of market insights at DWF Labs, stated that traders will no longer have to deal with expirations and decay, only betting on direction, and he expects a wave of index perpetualization in the coming months.
This is product design-driven, not based on spot capital inflows. Buyers want to continuously long volatility as hedgers and directional traders, while sellers are traders shorting volatility and collecting funding fees. Money flows from the repeatedly rolled VIX futures and exchange-traded products into perpetual margin accounts without expiration. If launched, beneficiaries would include the Cboe volatility complex and institutions needing fewer rollovers; those pressured would be term structure traders profiting from rollover spreads and market makers unable to hedge with spot.
Source: Public Information
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Cboe launched the VIX in 1993, introduced VIX futures in 2004, and VIX options in 2006, creating a derivatives complex for implied volatility that cannot be traded directly. In February 2018, the VelocityShares Daily Inverse VIX note was liquidated after a spike in volatility, exposing how term structure and leveraged rollovers can cause volatility products to drop to zero in a single day. Hocking referred to the gap as "no VIX spot," indicating a solution pointing towards no expiration date, rather than adding another monthly future.
U.S. exchanges are moving the dominant high-leverage perpetuals from the crypto market to new assets. Cboe's condition is to list once U.S. regulation on perpetual futures is clearer, so funding pathways are still in research, with no margin rules, funding fee formulas, or filing documents. Existing alternatives include the nearly non-traded VIX/USDT perpetual on Gate and futures linked to the Volmex Bitcoin volatility index on Hyperliquid. If traditional capital enters, it would go into Cboe margin accounts rather than stablecoin contracts on crypto exchanges.
This is similar to the Chicago Mercantile Exchange standardizing Bitcoin futures and the path of crypto exchanges replacing expiration dates with funding fees. Cboe is in a control phase: VIX futures and options are already the pricing center for volatility, and perpetuals add a non-rollover risk pipeline on the same index, not a new index.
Structurally, this represents a transfer of pricing power. The VIX levels were originally determined by the implied volatility of S&P 500 options, but the tradable prices are determined by near-month futures and rollover costs. Perpetuals use funding fees between longs and shorts to pull contract prices towards the reference index, effectively converting the rollover profits in the term structure into payments between continuous holders. The index remains unbuyable, and market makers still need to return to options and futures for hedging, so true spot pricing power will not emerge; only the method of charging for holding costs has changed.
ABAB News · Law of Cognition
Indices without spot are priced by derivatives.
Removing expiration dates turns rollover costs into funding fees.
Fear can be traded, but fear itself cannot be held.