Cboe Loosens FLEX Options Rules: More ETFs Cash In Easily
Published Date: 4/22/2026
Notice
Summary
Cboe Exchange wants to update its FLEX Options rules to make it easier for certain ETFs to use cash settlement. This change affects traders using FLEX options on ETFs by allowing more ETFs to qualify and removing the current 50-ETF limit. The update will be reviewed twice a year and aims to keep things fair and flexible without extra costs.
Analyzed Economic Effects
3 provisions identified: 3 benefits, 0 costs, 0 mixed.
Removal of 50‑ETF Cap
The Exchange proposes to remove the rule that capped cash‑settled FLEX ETF Options to no more than 50 underlying ETFs. As noted in the filing, 60 ETFs were eligible as of February 1, 2026, and removing the cap would allow any ETF that meets the liquidity tests to be eligible for cash‑settled FLEX options.
One‑Month Lookback for Cash‑Settled ETFs
If an ETF newly becomes FLEX‑eligible, the Exchange may allow cash settlement for FLEX options on that ETF based on the ETF's prior one month of trading statistics instead of waiting for the Exchange's regular bi‑annual review. The eligibility tests remain the same: $500 million average daily notional value and at least 4,680,000 average daily volume (ADV).
Tiered Wind‑Down for Ineligible ETFs
If an ETF fails the eligibility tests at a bi‑annual review, the Exchange will apply a tiered approach: if no open interest in cash‑settled FLEX options existed in the prior six months, new positions must be physically settled and existing cash‑settled positions may only be closed. If open interest did exist, the Exchange will allow opening new cash‑settled positions for one year from the bi‑annual review date, after which new positions must be physically settled and remaining cash‑settled positions may only be closed. If the ETF regains eligibility at either bi‑annual review during that year, full cash‑settlement eligibility resumes.
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