Option Volume Continues to Set Records

Data collected from the OCC (Options Clearing Corporation) show that options trading continues to attract increasing interest.  The recent growth rate has been spectacular, except for last year, when the a new annual record barely exceeded the previous year's record.

Below is a chart of annual options (not futures options) volume dating from the opening of the CBOE in 1973.

Options_volume_OCC

New records are anticipated for this year.  In fact, through the end of May, volume in equity options is more than 11% ahead of last year's record pace, while index option volume has increased by a remarkable 36%.

May 2010 was the most active month on record when volume for a single month passed 400,000,000 for the first time.  Helping that record total was the single day record of more than 30.8 million contracts, set on May 6 – the date of the 'flash crash.'

There are a great may players in the arena, but each of us can carve out his/her own little niche.

Good trading.


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2 Responses to Option Volume Continues to Set Records

  1. Jason 06/08/2010 at 10:24 PM #

    Mark, this is great stuff. I’m an option beginner, I have this question about exercising.
    When you exercise the option (e.g, one contract): Do you get all 100 shares for the cost of the contract or each stock at the current price per share? e.g 10/ each share of 100?
    Thanks for taking the time to answer my foolish question.
    Jason

  2. Mark Wolfinger 06/08/2010 at 10:59 PM #

    Jason,
    You are making this very difficult.
    When you own a call option you have the right to buy 100 shares at the strike price. Period.
    Thus, you pay the strike price, the whole strike price, and nothing but the strike price for each of the 100 shares.
    It does not matter at what price the stock is trading. It does not matter how much you paid for the option. If you own one call with a strike price of 40, you must pay $4,000 to own 100 shares.
    Of course, you would probably be better served to sell the call and not take ownership of the stock.
    I’ll bet you already knew that, but let something confuse you.
    Regards,