The Options Industry Council (OIC), an industry cooperation formed in 1992 to enhance the equity derivatives sector, has reported trading activity for the month of September. The body reported that a total of 365,917,341 contracts were traded in the month of September, signalling a 15.83 percent increase in activity as compared to the 315,911,302 contracts traded in September of last year. The move highlights the role market volatility has on trading volumes.
The organisation also reported promising metrics in its average daily volume figures for the month, the OIC saw ADV reach 17,424,636 contracts, a significant increase of 10.31% more than figures reported a year earlier of 15,795,565 contracts. Trading volume for the first three quarters of 2014 stood at 3,124,596,298 contracts, up 1.62 percent compared to the 3,074,874,727 contracts traded in the same period last year.
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The news coincides with positive performances seen at major derivatives venues in September, the CME saw record trading on the fourth of September, 2014, in its currency Options segment where the exchange saw notional value reach $32.4 billion.
The OIC reported a breakdown of the asset classes, its Equity options volume (options on individual stocks and ETPs) was 333,614,334 contracts, 16.72 percent more than last September when 285,831,547 contracts were exchanged. Average daily volume for equity options in September came in at 15,886,397 contracts, more than last year’s 14,291,577 contracts by 11.16 percent. Year-to-date equity options volume stood at 2,820,131,623 contracts, which is 1.18 percent greater than the 2,787,251,796 contracts traded at the same point last year.
The OIC serves as a benchmark for the Options sector; its sponsors include BATS Options, BOX Options Exchange, Chicago Board Options Exchange, C2 Options Exchange, International Securities Exchange, ISE Gemini, MIAX Options, NASDAQ OMX BX Options, NASDAQ OMX PHLX, NASDAQ Options Market, NYSE Amex Options, NYSE Arca Options and the Options Clearing Corporation (OCC).
The price of an Option is directly correlated to volatility in the market, for example, if volatility is high, the premium on the option will be relatively high, and vice versa. During periods of high volatility traders are more prone to take positions in anticipation of movements in the market. The VIX index, a measure of volatility in global financial markets saw a sharp rise in September, coming on the back of rate announcements by the ECB leader. The VIX is currently trading at 17.37, during the midst of the 2008 global recession the index climbed to the 79 mark.