After half-day outage, options exchange resumed trading
Markets • Software problem, not hacking, thought to be source.
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Trading on the biggest exchange for financial options finally materialized Thursday after a long outage apparently caused by software problems had delayed the opening.

The Chicago Board Options Exchange reopened just before 1 p.m. after being closed from the start of the trading day. The shutdown forced traders to scramble for alternatives.

The outage came in the wake of a brief scare in financial markets Tuesday afternoon when hackers sent a false Associated Press tweet reporting explosions at the White House. Stocks prices plunged for two minutes as computerized trading systems unloaded equities. Regulators are increasingly looking into the safety of computerized trading systems.

Initially, there was speculation that CBOE computers had been hacked, but exchange officials insisted that hackers were not involved. It was an internal "software issue," said spokewoman Gail Osten.

The CBOE is the largest U.S. options exchange. It is the only place to trade two popular options — one a bet on the future price of the Standard and Poor's 500 stock index, the other a kind of insurance against wild stock-price swings.

Options give the holder the right, but not the obligation, to buy and sell stocks or other financial assets in the future.

The exchange normally opens at 9:30 a.m. When it opened at 12:50 p.m., the only trading was in options on the S&P 500, according to Osten. Trading of other options resumed 10 minutes later.

Some on Wall Street shrugged off the outage. "If it keeps happening, of course, that's different," said Ryan Detrick, a senior technical strategist at Schaeffer's Investment Research.

The volatility index traded on the CBOE — known as the VIX — is a measure of how likely stocks will swing in the future. Last week, investors anxious over the Boston Marathon bombings and slowing economic growth in China at one point sent the VIX up 40 percent, to 17.6. But the option quickly fell back to 13, around where it's been trading since the start of 2013.

The VIX closed at 13.7 on Thursday.