Definition
The term CBOE S&P 500 BuyWrite Index refers to a composite that tracks the performance of a hypothetical covered call strategy involving companies in the S&P 500. The CBOE S&P 500 BuyWrite Index is published and maintained by the Chicago Board Options Exchange (CBOE) under an agreement with Standard & Poor's.
Explanation
The CBOE S&P 500 BuyWrite Index (BXM) is designed to mimic the performance of a buy-write strategy applied to the S&P 500. Also referred to as a covered call, a buy-write is a strategy in which the investor purchases a portfolio of stocks (in this case the S&P 500) and also sells call options on the same "basket" of stocks. Buy-writes typically underperform stocks when their prices increase, and outperform stocks when their prices decline.
The CBOE S&P 500 BuyWrite Index is a passive index involving the purchase of stocks of companies appearing in the S&P 500 (SPX) and the writing of a SPXSM call option. The SPXSM will typically expire in one month and its exercise price is usually above the prevailing price of the index. First published in 2002, the CBOE S&P 500 BuyWrite Index trades under the symbol BXM.
Related Terms
The term CBOE Russell 2000 BuyWrite Index refers to a composite that tracks the performance of a hypothetical covered call strategy involving companies in the Russell 2000. The CBOE Russell 2000 BuyWrite Index is published and maintained by the Chicago Board Options Exchange (CBOE) under an agreement with The Frank Russell Company.
Moneyzine EditorJanuary 11th, 2024
The term CBOE NASDAQ 100 BuyWrite Index refers to a composite that tracks the performance of a hypothetical covered call strategy involving companies in the NASDAQ 100. The CBOE NASDAQ 100 BuyWrite Index is published and maintained by the Chicago Board Options Exchange (CBOE) under an agreement with the NASDAQ.Moneyzine EditorJanuary 11th, 2024
The term CBOE DJIA BuyWrite Index refers to a composite that tracks the performance of a hypothetical covered call strategy involving the Dow Jones Industrial Average. The CBOE DJIA BuyWrite Index is published and maintained by the Chicago Board Options Exchange (CBOE) under an agreement with Dow Jones & Company, Inc.Moneyzine EditorJanuary 11th, 2024- The term Wilshire 2500 Value Index refers to a composite that includes small and large capitalization companies located in the United States that also exhibit value characteristics. The Wilshire 2500 Value is published and maintained by Wilshire Associates.Moneyzine EditorSeptember 21st, 2023
