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Good news – it’s here!

VIX Futures contracts will be traded at the CFE - The Chicago Board Options Exchange’s Futures Exchange. Below is a list of the contract specifications:

CBOE Volatility Index (VIX) Futures

CBOE Volatility Index-- VIX
Jumbo CBOE Volatility Index -- VXB
VIX Futures-- VX (will settle based on the VXB)

March 26, 2004, pending regulatory approval

CBOE Volatility Index Futures (VX) will track the level of the Jumbo CBOE Volatility Index (VXB), which is10 times the value of the CBOE Volatility Index (VIX).

$100 times the Jumbo CBOE Volatility Index (VXB)

Two serial contract months plus two contract months on the February quarterly cycle. (February, May, August and November)

8:30 a.m. – 3:15 p.m. Central Standard Time (Chicago Time)

CBOEdirect

0.10 of one VXB point equal to $10.00 per contract, i.e., a price change from 160.0 to 160.1 equals $10.00, and a price change from 160.0 to 101.0 equals $100.00.

The Tuesday prior to the third Friday of the expiring month

The Wednesday prior to the third Friday of the expiring month

Cash settled. The final settlement price for VIX Futures shall be 10 times a Special Opening Quotation (SOQ) of VIX on Wednesday. The settlement value will be calculated from the options used to calculate the index on the settlement date. The opening price for any series in which there is no trade shall be the average of that option’s bid price and ask price as determined at the opening of trading. The final settlement price will be rounded to the nearest 0.10.

5,000 contracts

25 contracts

The method of calculating VIX was changed in early 2003. Instead of using the S&P 100 (OEX) Index options, it is now calculated using the options on the S&P 500 (SPX). For more information about the change click on the following link: http://www.cboe.com/micro/vix/index.asp. This change helped facilitate the development of a tradable futures contract based on VIX.

Some of the possible uses for the VIX Futures may include taking advantage of a market view on the direction of volatility, hedging volatility risk, managing risks associated with growing markets for volatility and variance swaps and taking advantage of arbitrage opportunities.

The VIX futures will be regulated by the CFTC and margin requirements will be determined by The Options Clearing Corporation. Advisors who wish to discuss or use these products with clients need to hold a Series 3 license. Individuals who wish to trade VX futures need to have a futures account with a registered futures broker or have an Introducing Broker (IB) relationship with such a firm.

Another exciting product soon to follow is options on the VXB, which are expected in the second quarter of 2004.

FOR REGISTERED REPRESENTATIVES ONLY. NOT FOR CUSTOMER DISTRIBUTION.

Options are not suitable for every investor. For more information, consult your investment advisor. Prior to buying and selling options, a person must receive a copy of Characteristics and Risks of Standardized Options which is available from your broker or from The Options Clearing Corporation (OCC) by calling 1-888-OPTIONS, or by writing to OCC at One North Wacker Dr. Suite 500, Chicago, IL 60606.