Firms and traders seek to hedge risk and capitalize on equity market fluctuations.
Traders demand products that could reduce trading costs and improve execution.
Volatility
is the main driving force of financial markets. Where volatility appears, there
is also increased trading activity by traders and investment firms. The latest
data suggests that participants are looking for new products that allow them to
leverage market volatility better.
A recent
study by Acuiti, conducted in association with MIAX, suggests a surge in demand
for volatility products in the derivatives markets. The research reveals that
firms and traders are increasingly looking to hedge risk and profit from the
spikes in volatility, which is a characteristic of equity markets from 2020.
Traders Show Rising Demand
for Volatility Products
According
to the study named ‘Expanding Horizons in Volatility Trading’, 44% of the
Futures Commission Merchants (FCMs) reported increased demand for trading
volatility since 2020 from their client base. This research involved 94
proprietary trading firms, hedge funds, banks, interdealer brokers, and major
FCMs serving the derivatives market.
The
findings suggest that firms trading volatility are keen to expand the ecosystem with new tradable products parallel to established ones.
Moreover, the respondents expressed a desire for innovative products that could
reduce trading costs and improve execution, such as futures and options with
smaller tick sizes.
Traders are
calling on exchanges to innovate and introduce new concepts to the market, with
methodology viewed as a crucial factor for any firm considering a new product. One
notable finding is the strong demand for new derivatives contracts among
volatility traders. This indicates a significant appetite for expanding their
trading options within the volatility trading community.
“There is
significant room for innovation in volatility markets,” Ross Lancaster, the
Head of Research at Acuiti, commented. “Different products with different
methodologies will enable firms to trade across different measures of
volatility, expanding the strategies used and creating basis and arbitrage trading
opportunities.”
The report
also suggests that volatility trading is expected to experience substantial
growth in the future. Many firms are planning to adopt this asset class and
trade new products alongside their existing ones, further driving the expansion
of volatility trading.
Index
methodology emerges as a crucial factor for most market participants. The
success of any new contract is heavily influenced by the methodology used to
calculate the index, making it an important consideration for traders and
investors.
Additionally,
the report reveals a growing trend in the popularity of short-dated options
trading. This trend has the potential to greatly impact expectations for listed
volatility products and their associated calculations.
The VIX,
offered by the CBOE, is the most popular volatility product. It calculates
volatility based on S&P 500 options traded exclusively on its exchange. On
the other hand, MIAX provides its own volatility index called SPIKES, which
measures 30-day expected volatility using options on the SPDR S&P 500 ETF,
the world's largest exchange-traded fund.
“Demand for
volatility products across futures, options and ETFs remains strong, with
market participants continuing to look for ways to manage their risk and hedge
portfolios even during times of low volatility,” Kaitlin Meyer, the VP of Marketing
and Sales at MIAX, commented.
Meyer highlighted that SPIKES Volatility Products offer traders an alternative when trading products based on the volatility indexes, boasting a more robust methodology and lower exchange fees to support their strategies.
A
significant finding of the report was the willingness of volatility traders to
diversify their trading by including new volatility products. As much as 79% of
the respondents expressed their openness to trading SPIKES alongside
established volatility products.
Volatility
is the main driving force of financial markets. Where volatility appears, there
is also increased trading activity by traders and investment firms. The latest
data suggests that participants are looking for new products that allow them to
leverage market volatility better.
A recent
study by Acuiti, conducted in association with MIAX, suggests a surge in demand
for volatility products in the derivatives markets. The research reveals that
firms and traders are increasingly looking to hedge risk and profit from the
spikes in volatility, which is a characteristic of equity markets from 2020.
Traders Show Rising Demand
for Volatility Products
According
to the study named ‘Expanding Horizons in Volatility Trading’, 44% of the
Futures Commission Merchants (FCMs) reported increased demand for trading
volatility since 2020 from their client base. This research involved 94
proprietary trading firms, hedge funds, banks, interdealer brokers, and major
FCMs serving the derivatives market.
The
findings suggest that firms trading volatility are keen to expand the ecosystem with new tradable products parallel to established ones.
Moreover, the respondents expressed a desire for innovative products that could
reduce trading costs and improve execution, such as futures and options with
smaller tick sizes.
Traders are
calling on exchanges to innovate and introduce new concepts to the market, with
methodology viewed as a crucial factor for any firm considering a new product. One
notable finding is the strong demand for new derivatives contracts among
volatility traders. This indicates a significant appetite for expanding their
trading options within the volatility trading community.
“There is
significant room for innovation in volatility markets,” Ross Lancaster, the
Head of Research at Acuiti, commented. “Different products with different
methodologies will enable firms to trade across different measures of
volatility, expanding the strategies used and creating basis and arbitrage trading
opportunities.”
The report
also suggests that volatility trading is expected to experience substantial
growth in the future. Many firms are planning to adopt this asset class and
trade new products alongside their existing ones, further driving the expansion
of volatility trading.
Index
methodology emerges as a crucial factor for most market participants. The
success of any new contract is heavily influenced by the methodology used to
calculate the index, making it an important consideration for traders and
investors.
Additionally,
the report reveals a growing trend in the popularity of short-dated options
trading. This trend has the potential to greatly impact expectations for listed
volatility products and their associated calculations.
The VIX,
offered by the CBOE, is the most popular volatility product. It calculates
volatility based on S&P 500 options traded exclusively on its exchange. On
the other hand, MIAX provides its own volatility index called SPIKES, which
measures 30-day expected volatility using options on the SPDR S&P 500 ETF,
the world's largest exchange-traded fund.
“Demand for
volatility products across futures, options and ETFs remains strong, with
market participants continuing to look for ways to manage their risk and hedge
portfolios even during times of low volatility,” Kaitlin Meyer, the VP of Marketing
and Sales at MIAX, commented.
Meyer highlighted that SPIKES Volatility Products offer traders an alternative when trading products based on the volatility indexes, boasting a more robust methodology and lower exchange fees to support their strategies.
A
significant finding of the report was the willingness of volatility traders to
diversify their trading by including new volatility products. As much as 79% of
the respondents expressed their openness to trading SPIKES alongside
established volatility products.
Damian's adventure with financial markets began at the Cracow University of Economics, where he obtained his MA in finance and accounting. Starting from the retail trader perspective, he collaborated with brokerage houses and financial portals in Poland as an independent editor and content manager. His adventure with Finance Magnates began in 2016, where he is working as a business intelligence analyst.
FXCubic Integrates Devexperts' DXtrade to Enhance Broker Solutions
Hannelé De Necker, CEO, IFX Brokers | FMAS:24
Hannelé De Necker, CEO, IFX Brokers | FMAS:24
1 week to go until FMAS:24 kicks off and we couldn't skip our interviews with some of this year's sponsors 🤩 Starting off strong with Hannelé De Necker, CEO OF IFX Brokers.
See you there!
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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1 week to go until FMAS:24 kicks off and we couldn't skip our interviews with some of this year's sponsors 🤩 Starting off strong with Hannelé De Necker, CEO OF IFX Brokers.
See you there!
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
👍 Facebook: https://www.facebook.com/FinanceMagnatesEvents
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Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
👍 Facebook: https://www.facebook.com/FinanceMagnatesEvents
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🐦 Twitter: https://twitter.com/F_M_events
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▶️ YouTube: https://www.youtube.com/@FinanceMagnates_official
Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
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FMAS:24 | Sneak Peak
FMAS:24 | Sneak Peak
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
👍 Facebook: https://www.facebook.com/FinanceMagnatesEvents
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▶️ YouTube: https://www.youtube.com/@FinanceMagnates_official
Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
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🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa