US listed options volume surged in September, as a combination of renewed retail demand around story stocks and spiking volatility resulted in strong volume gains for the month.
TABB Says US Listed Options Volume Surged in September on Apple Product Launch, Alibaba IPO Action and Return of Volatility.
Trading totaled 365.9 million contracts for the month, representing a 15.8% increase from the 315.9 million contracts traded in September 2013 and 14.3% from August 2014 volume of 320 million contracts, says Andy Nybo, TABB principal and director of derivatives research, and Luther Zhao, research analyst, in publishing the TABB Options LiquidityMatrix? for September 2014,
Although rising volatility was a significant factor driving the September volume increase, investor attention on Apple?s September 9th new product event and the September 19th Alibaba IPO clearly contributed to the volume.
Options on Apple accounted for 26.2 million contracts in September, with 3.1 million contracts trading on September 9th alone, accounting for 17% of total volume for the day.?
This compares to the 7.2% proportion for the month of September as a whole.?
The Alibaba IPO provided significant reasons to trade as well, as investors positioned exposures around the highly anticipated IPO.?
Although, Alibaba options were not listed until the end of the month, investors used options in other companies that ultimately would be impacted by the success or failure of the IPO.
Options in Yahoo, which reaped a windfall from the sale of its shares in Alibaba, saw significant volume in the days leading up to and after the listing.?
The trading frenzy surrounding the listing leaked over into other companies as well, including technology suppliers that appeared on the radar screen, as well as potential companies that could at some point become a takeover target of Alibaba or others companies that reaped financial windfalls from the offering.
Underpinning the strong September volume has been the return of market volatility, with the CBOE Volatility Index??(VIX?) increasing by 53% since September 1st.?
The increased volatility has attracted the attention of traders, with more aggressive trading strategies involving volatility and short term directional becoming back in vogue.