Why Option Trading Volume Continues To Grow
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Price Headley BigTrends.com |
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We've been involved with options trading since the early-1990s and have seen the explosive growth of their usage.
Despite mediocre global economic conditions and lower stock volume at some brokers, the leading options exchange (CBOE) reported some impressive numbers for 2011. We'll examine their numbers as a proxy for the entire option industry.
With the vast diversity of options in terms of hedging, speculation and leverage, it's not surprising to me to see this continued growth and increased popularity.
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Overall, CBOE.com reported combined options trading volume of 1.20 billion contracts in 2011 vs 1.12 in 2010 (up 7%). Average daily volume was up 8% to 4.78 million contracts.
The real growth is in trading of Index, ETF, and VIX options — we've previously discussed the growing popularity of ETFs. Two CBOE flagship products, options on the S&P 500 Index (SPX) and CBOE Volatility Index (VIX), both boasted all-time annual volume records.
CBOE ETF options volume in 2011 was up a whopping 22% over 2010. And VIX options trading (which actually is on the CBOE-owned Chicago Futures Exchange) grew an explosive 174% over 2010.
The many advantages of using options in a portion of your portfolio for any type of investor or trader continues to become more apparent year after year, which is seen in the increasing volume and popularity.
Trade Well,
Price Headley
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Price Headley is the founder of BigTrends.com, which provides investors with specific real-time stock and options strategies and investment education to profit from significant market trends. Timer digest recognized the success of BigTrend.com’s investment strategies by ranking Price among the Top 10 Market Timers for stock market timing for the 2000 calendar year.
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