CBOE's fear gauge, S&P 500 index options hit records

CHICAGO, Oct 6 (Reuters) - The Chicago Board Options Exchange said on Monday option trading in the Standard & Poor's 500 index soared to a record high as did a benchmark that tracks investor sentiment, commonly known as the VIX or fear index.

The records at the largest U.S. options market underscored investors' appetite for options to offset their risk as worries about a global credit crisis and a slow economy slammed stock markets around the world.

The demand also comes as the U.S. Securities and Exchange Commission is set to lift its short-selling ban on more than 950 financial stocks on Wednesday night.

Option volume in the S&P 500 index .SPX hit a high of 2.2 million contracts, beating the previous record of 2.1 million contracts traded on Aug. 16, 2007, CBOE said in a statement.

CBOE has an exclusive license with Standard & Poor's, a unit of McGraw-Hill Cos (MHP.N: Quote, Profile, Research, Stock Buzz), to list SPX options, its most actively traded contract.

In addition, the exchange said total volume stood at 9.6 million contracts, ranking as the third busiest single day in CBOE's history.

The CBOE Volatility Index .VIX, Wall Street's barometer of investor fear, also set a pair of new records during the session. A new intraday high of 58.24 was set as well as a record close of 52.05, CBOE said.

The VIX measures projected stock market volatility conveyed by near-term S&P 500 index option prices.

CBOE introduced the index in 1993 and later developed options on the VIX. Futures on the VIX are traded at the CBOE Futures Exchange. (Reporting by Doris Frankel, editing by Leslie Gevirtz)