Wall Street is considering adopting perpetual futures, a trading mechanism commercialized by the cryptocurrency industry and originally proposed by economist Robert Shiller in 1993, for traditional financial products like the VIX.
According to Bloomberg reports, Cboe is exploring perpetual futures on the VIX, though the plans remain in early stages with no contract specifications or formal regulatory filings yet submitted.
The VIX Index measures the expected 30-day volatility of the S&P 500 using options pricing. Because investors purchase options to hedge against rapid market downturns, demand surges during declines, causing the index to spike. While the VIX already supports an active derivatives industry including futures, options, and exchange-traded products, traditional futures feature an expiration date. This requires traders to roll their positions over to new contracts, which can incur costs and negatively weigh on returns.
In contrast, perpetual swaps do not expire. They rely on a funding rate mechanism designed to anchor the contract price to the underlying spot index. Martin Lee, market insights lead at DWF Labs, noted that traders do not have to contend with expiries and decay using perpetual structures, adding that expectations point toward an increasing wave of similar product adaptations in the coming months.
Some crypto platforms, such as Gate, have offered VIX-related perpetual contracts with low volume and liquidity, while Hyperliquid recently listed futures tied to bitcoin's implied volatility index from Volmex. A potential launch of formal VIX perps by Cboe could attract additional participants to volatility markets and improve alignment across various S&P 500 derivatives.
Despite the advantages of avoiding expiration dates, challenges remain. Analysts at Marex Solutions highlighted that the VIX is a mathematical calculation rather than a deliverable cash asset like bitcoin, making it difficult for market makers to buy and sell the spot asset directly to hedge risks. Consequently, while removing expiry eliminates rollover mechanics, costs in the form of funding payments, basis risk, and hedging expenses still persist.
