Cboe Global Markets CEO Craig Donohue is drawing a clear line between two popular trading products: listed options and perpetual futures. His warning, delivered during the exchange operator's third-quarter earnings call, centers on the risks that perpetual futures can pose to everyday investors.
Perpetual futures are a type of derivative contract that has exploded in popularity on offshore crypto exchanges. Unlike traditional futures, they have no expiration date, allowing traders to hold positions indefinitely. They are typically traded with high leverage, meaning a small price move can result in large gains—or losses.
Donohue cautioned that these products can trigger sudden liquidations and open-ended losses when markets move sharply. In a liquidation, an exchange automatically closes a trader's position when their collateral falls below a required level, often locking in a total loss. Because perpetual futures can be leveraged 10x, 50x, or even 100x, a modest adverse price swing can wipe out a trader's entire account.
To illustrate his point, Donohue pointed to a recent spike in trading of VIX-linked call options. Earlier this month, daily volume in these options reached its highest level in more than two years, surpassing even the rush seen during the 2025 “Liberation Day” sell-off, when the VIX topped 50, according to Reuters. The VIX, or Cboe Volatility Index, is a real-time measure of expected market volatility, often called the “fear gauge.”
Why the VIX spike matters
The surge in VIX call-option trading is notable because it shows investors are actively seeking protection against potential market downturns. Call options give the buyer the right to purchase an asset at a set price within a specific timeframe. In this case, buying VIX calls is a way to bet that volatility will rise, which often happens during market sell-offs.
Donohue framed this activity as a reminder of why many investors still prefer listed options over perpetual futures. With a listed option, you pay a premium up front, and that is typically the most you can lose. Your downside is capped at the premium paid, even if the market moves against you. In contrast, perpetual futures can expose traders to losses that exceed their initial margin, sometimes by many multiples.
This distinction is crucial for everyday investors. The appeal of perpetual futures lies in their simplicity and leverage, but that leverage cuts both ways. A trader who buys a perpetual contract with 50x leverage and the market moves 2% against them faces a 100% loss on their margin. In a fast-moving market, that can happen in seconds.
What it means for investors
For most individual investors, the takeaway is not to rush into perpetual futures without fully understanding the risks. The product is largely unregulated, especially on offshore exchanges, and offers little in the way of investor protections. Sudden liquidations can occur without warning, and the potential for open-ended losses is a stark contrast to the defined risk of buying a listed option.
Donohue's comments also highlight the ongoing competition between traditional exchanges like Cboe and the fast-growing crypto derivatives market. While Cboe offers its own crypto futures and options, it has not embraced perpetual futures in the same way. The CEO's warning can be seen as an effort to steer investors toward products with clearer risk profiles.
For those who do trade perpetual futures, experts often recommend using only a small portion of their portfolio and setting strict stop-loss orders. But even with precautions, the risk of sudden liquidation remains. As Donohue noted, the recent VIX call-option surge shows that many investors are still seeking protection—and they are finding it in listed options, where the maximum loss is known upfront.
The broader market context is also important. With volatility expected to remain elevated, as seen in the recent VIX spike, the difference between capped and uncapped risk becomes more pronounced. Investors who are worried about a potential downturn may find comfort in products that offer defined risk, even if they cost a premium.
In the end, Donohue's message is a simple one: know what you're trading. Perpetual futures can be a powerful tool, but they are not for everyone. For most investors, the predictability of listed options—where you can't lose more than you put in—may be a safer choice.
