Below are eight charts, all of which highlight growth related to options markets or VIX® futures.
CHART #1 – GROWTH IN OPTIONS VOLUME ON 4 EXCHANGES
Aggregate total options volume on four exchanges – Bats, CBOE, C-2, and EDGX – grew 27% from 2012 through 2016 – from 1.24 billion contracts to 1.57 billion contracts.
CHART #2 – GROWTH IN NOTIONAL VALUE OF VOLUME FOR SPX OPTIONS
When instititional investors are considering portfolio management tools, often some of the key considerations concern contract size and liquidity. The estimated average daily value of the notional volume traded in S&P 500® (SPX) options grew from $12 billion in 2001, to more than $200 billion in 2016. The notional value of the volume for options on SPX is much larger than for any other listed option in the U.S. See the 2016 paper by Wilshire at www.cboe.com/wilshire for more analysis of the notional value of volume.
CHART #3 – GROWTH IN CONTRACT VOLUME FOR SPX OPTIONS
Average daily volume for CBOE options on the S&P 500 grew from 97,868 in 2001, to 1,023,623 contracts in 2016.
CHART #4 – VIX FUTURES GROWTH
Electronic trading of futures on the CBOE Volatility Index® (VIX®) was launched on the CBOE Futures Exchange (CFE) in March 2004, and VIX futures volume has risen every year since 2004. www.cboe.com/VIX
CHART #5 – VIX OPTIONS
VIX options launched on CBOE in February 2006, and average daily volume for VIX options grew from 102,560 in 2008, to 588,279 in 2016. www.cboe.com/VIX.
CHART #6 – SPXW WEEKLYS
CBOE offers a suite of options based on the S&P 500 Index with weekly expirations, SPXW Weeklys (SPXW). SPXW Weeklys are options that are listed to provide expiration opportunities every week, and now offer three different expirations per week.
- • SPXW Friday Weeklys
- • SPXW Wednesday Weeklys
- • SPXW Monday Weeklys
SPXW Weeklys can provide opportunities for investors to implement more targeted buying, selling or spreading strategies around event-driven situations. www.cboe.com/SPXW.
CHART #7 – GROWTH FOR OPTIONS-BASED BENCHMARK INDEXES
CBOE is the worldwide pioneer and leader regarding benchmarks for options-based performance, as it continues to calculate and disseminate more than 30 options-based strategy benchmark indexes, including the CBOE S&P 500 BuyWrite Index (BXM), CBOE S&P 500 PutWrite Index (PUT), CBOE S&P 500 Iron Butterfly Index (BFLY), CBOE VIX Tail Hedge Index (VXTH), and CBOE S&P 500 Buffer Protect Index Balanced Series (SPRO). www.cboe.com/benchmarks.
Since mid-1986 the CBOE S&P 500 30-Delta BuyWrite Index (BXMD) rose about 2145% and the CBOE PUT Index rose 1814%; both of these CBOE indexes had higher returns, lower volatility, and stronger risk-adjusted returns than the S&P 500 and S&P GSCI indexes. www.cboe.com/benchmarks.
CHART #8 – MORE USE OF OPTIONS BY FUNDS
A paper by Keith Black and Edward Szado. Performance Analysis of Options-Based Equity Mutual Funds, CEFs, and ETFs found that the number of ’40 Act funds using options grew from 10 in the year 2000 to 119 funds in 2014.
In April 2016 Morningstar placed dozens of mutual funds in its new Option Writing category in its U.S Retail Category system. Morningstar’s Category Index for the new Option Writing category is the CBOE S&P 500 BuyWrite Index (BXM). Steve Sears wrote in Barron’s Striking Price column on May 7, 2016 –
“ … THE OPTIONS INDUSTRY has taken a major step onto Main Street. Morningstar, which millions of individuals rely upon to evaluate mutual funds, has created a category for options-trading funds. The significance of this can’t be overstated. It indicates options have become part of the mainstream investment landscape, like growth mutual funds and index funds. … Morningstar’s recognition will probably incentivize asset managers to market new funds in the category. … “
For more information on funds’ use of options, please visit www.cboe.com/funds.
If you would like to read more about the many ways in which options and VIX futures can be used for portfolio management, please visit www.cboe.com.