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An interim peace deal reached between the U.S. and Iran yesterday to end the four-month war is pumping positive market activity in the early going. The memorandum of understanding is set to be inked on Friday in Geneva, Switzerland, kicking off a 60-day ceasefire period as the two nail down specifics of the accord.
The options market is moving faster, tools are getting better, and discipline matters more than ever. Tradier’s TraderFest, sponsored by Cboe, recently brought together traders and industry leaders to discuss topics just like this.
May was a record month for Cboe’s Global Derivatives business with an Average Daily Volume (ADV) of 22.0 million contracts traded. S&P 500 Index Options (SPX) had an ADV of 5.02 million contracts and maintained 74.51% market share.
At 1/10th the size of SPX, XSP offers very similar notional size, weekly expirations, and PM-settlement to SPY, but with even more potential benefits.
Many trading strategies, such as covered-call or spread trading, involve options writing (selling), where the primary risks are market movement and volatility. But there's another risk if you happen to be writing options on dividend-paying equities like SPY ETFs: early assignment.
There are a number of different types of options contracts available on broad-based U.S. equity indexes. Some of the most actively traded products include options on SPY, SPX and XSPSM (Mini-SPX). They all track the S&P 500® and both SPY and XSP options have the same notional size, making them somewhat interchangeable. A key difference, however, is settlement style.
The U.S. equities market volume increased in May after a pullback in April. Total Average Daily Volume (ADV) increased 8.87% to 19.4 billion shares. The increase in volatility brought investors back to displayed markets, with Cboe EDGX Equities Exchange (EDGX) benefitting. EDGX saw growth across retail trading, Quote Depletion Protection (QDP) and Retail Price Improvement (RPI) orders. Addressable market share increased to 8.6 billion shares, with Cboe’s market share growing to 21.1%.
European equity trading volumes shifted towards Dark order books, Periodic Auctions and Systematic Internalisers during April. Cboe Europe maintained its position as the largest European exchange by market share, delivering strong performance across its diverse range of execution mechanisms.
The U.S. cash equities market saw a pullback in April, with total market Average Daily Volume (ADV) decreasing 12.99% month-over-month to 17.8 billion shares. Against this backdrop of declining volume, market share shifted toward off-exchange venues, which captured nearly half of all volume. Cboe EDGX® Equities Exchange (EDGX) stood out, increasing its market share to 4.5%. Within on-exchange trading, Cboe maintained a strong 21.0% market share.
