The Chicago Board Options Exchange launched the Crude Oil Volatility Index (ticker OVX) this week, an energy counterpart to its closely watched Volatility Index.
The OVX, or "Oil VIX," measures the market's expectation of 30-day volatility of crude oil prices by applying the well-known CBOE Volatility Index (VIX) methodology to options on the United States Oil Fund, LP (ticker symbol USO), spanning a wide range of strike prices. Information on OVX will be disseminated daily through CBOE's website, as well as through all major data vendors.
The new exchange allows investors to bet on the oil market's direction by buying options contracts.
Investors can make money on moves in the oil market either way by buying options contracts that bet on a certain level for the index.
A typical contract will cost about $500, depending on market factors and price determinants. Traders capitalize as oil trading moves in both directions, with a 30-day contract duration.
More at http://www.cboe.com/micro/oilvix/introduction.aspx
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