An active Twitter personality with clear views on electronic markets, Megan Morgan,Vice President of sell side business development at Eurex Exchange, is an advocate of VSTOXX® as the volatility benchmark for the European time zone. In this interview, she explains why professional volatility trades should consider European volatility as the world heats up.
Eurex: Why should professional traders consider VSTOXX® Futures?
Morgan: Simply put,the world is volatile.While theVIX is a terrific product,it is no longer a proxy for European volatility.VSTOXX® Futures are a precise tool for traders to gain exposure to European volatility.This is especially interesting if they are looking to hedge European exposure since the VSTOXX® index is based on the EURO
STOXX 50®, a basket or European equities. Additionally, VSTOXX® Futures are euro-denominated, allowing managers to hedge their euro-denominated equity portfolios with a euro-denominated product.
Expected changes in central bank policy in a number of leading economies, geopolitical turmoil in the Middle East and the ongoing European Sovereign Debt Crisis are just a few of underlying causes of ongoing market turbulence.This indicates thatVSTOXX® Futures will remain an indispensable tool for an asset manager’s toolbox.
Traders and managers in the U.S. have proven to be significant contributors to the overall market inVSTOXX® Futures.
Eurex: How do VSTOXX® Futures compare with VIX Futures?
Morgan: VSTOXX® Futures have been designed to better reflect European market volatility. While at first glance it may look like VSTOXX® andVIX are highly correlated,closer investigation reveals reactions of different magnitudes for events that are more/less relevant for Europe. For professional traders, the VSTOXX®/VIX relationship presents a variety of spreading opportunities along the term structure.
Eurex: How can I view the VSTOXX® Futures order book?
Morgan: Key VSTOXX® Vendor codes are:
Eurex Exchange’s T7 trading system – FVS
Bloomberg – FVSA INDEX
Reuters – O#FVS:
TT – FVS
Eurex: Where can traders get more information on VSTOXX® Futures?
Morgan: We believe that education is instrumental in growing volatility as an asset class as well as helping grow our VSTOXX® Futures specifically.That is why we’ve launched a comprehensive educational program:
- View VSTOXX® contract specifications (http://www.eurexchange.com/exchange-en/products/vol/vol/14566/)
- Find more information on the calculation method of the underlying VSTOXX® Index (http://www.stoxx.com/indices/index_information.html?symbol=V2TX)
- DownloadourVSTOXX®AdvancedServices(linkto:http://www.eurexchange.com/exchange-en/products/vol/advanced-vstoxx-services/)a Python-based too that helps you simulate the outcome of hypothetical investment decisions.
- Sign up for our monthlyVSTOXX® newsletter to get topical perspectives on volatility (http://www.eurexgroup.com/group-en/newsroom/newsletter/)
- Interested in attending a targeted invitation-only education and networking evening? Contact Megan.Morgan@eurexchange.com.
For more information please contact your Advantage Futures representative at 312.800.7000.
Megan Morgan is Vice President of sell side business development at Eurex Exchange. She is the VSTOXX® product manager for the Americas and has spearheaded the Exchange’s successful efforts to grow the product in the key U.S. market. Megan also serves as Chicago Chapter Leader for the high-profile women’s professional organization 85 Broads. Megan holds an MBA from the University of Chicago and an undergraduate degree from the University of North Carolina at Chapel Hill.
Follow Megan Morgan for more insights @meganbeausang