September solid month for options volume

Options volume

September is shaping up to be a solid month for options volume with the metric higher by 9.7% compared to the same time one month ago.

According to the OCC, total index and equity options volumes have run at an average pace of 17.65 million contracts per day through September 23. Such an average is the strongest pace since February when daily volumes averaged 18.45 million contracts.

Still, the highest monthly volume total belongs to January 2014 (average 18.84mm). During the first two months of the year, daily volume exceeded 18 million contracts on 12 days. In September that threshold has only been achieved for five trading days so far. The most voluminous day of the month coincided with the Sept. 19 IPO of Alibaba (Ticker: BABA) when total daily options volume totaled 25.3 million contracts. And although options are not yet available on BABA, option traders flocked the same day to trading in its major shareholder, Yahoo Inc. (Ticker: YHOO). Volume of 233 million Yahoo shares on Sept. 19 compares to its 15-day average volume of 56 million shares, while option traders exchanged 1.83 million calls and puts, which is more than three times YHOO’s typical daily options volume.

Thus far in September option volumes have been boosted by contracts on individual names rather than on index options. At 9.5%, index option volume as a percentage of overall option volume is the lowest since November 2013 when index volume accounted for 9.2% of total option volume.
 


Chart shows OCC equity and index volumes run at seven-month high for first three weeks in September.

About the Author

Andrew is a seasoned trader and commentator of global financial markets. He worked for several London-based banks trading cash and derivatives before moving to the U.S. to attend graduate school.