[Chicago Mercantile Exchange (CME)](http://www.cme.com/), along with noted [economist Robert Shiller’s MacroMarkets](http://money.cnn.com/2006/06/16/real_estate/buying_selling/Shiller_weighs_in_on_housing/index.htm), as well as Fiserv and Standard & Poor’s, [have created a market exchange for futures and options contracts on home prices in ten cities in the United States](http://www.project-syndicate.org/commentary/shiller36/English). [Here’s how it works.](http://www.mortgagenewsdaily.com/6162006_Real_Estate_Options.asp) The data feed from the index is provided to Matrix from [Tradition Financial Services (TFS)](http://www.tfsbrokers.com/), a broker that executes housing futures and options.
Trading for this new index concept began on May 22nd and trading volume is increasing, especially in the more volatile market (which makes perfect sense). For now, I plan to post an update once per week.
Miami continues to lead all markets with 93 contracts, followed by LA with 79 and Las Vegas with 52 contracts. Denver trails all cities with 13. There is a growing correlation with higher trading activity and greater volatility. This pattern is expected to increase as investors in those market are more motivated to hedge their bets.
Like last week, of the 10 markets that have indexes, only New York showed an expected gain in the long contracts (May 2007), up 2.08%. Los Angeles dropped sharply by 6.48%, followed by San Francisco at -4.18%.
[See archived posts in Matrix that cover the CME Housing Index](http://matrix.millersamuel.com/index.php?s=cme&submit=Search)
[Delayed Futures & Options Quotes (up to 10 min)](http://www.cme.com/trading/dta/del/product_list.html?ProductType=hng)
Tags: Robert Shiller