Slide 1: Options Markets 2019
Options Markets 2019 cmegroup.com/options
Slide 2: Table of Contents
Table of Contents Introduction Benefits of Options Growth in Usage Trading and Risk Management Advantages Product Offering and Capabilities Options Tools Appendix © 2019 CME Group. All rights reserved.
Slide 3: Nearly 4 million options contracts traded daily in 2018
Nearly 4 million options contracts traded daily in 2018 Options on futures offer deep liquidity on the broadest set of products, maturities and strikes across the major investable asset classes at CME Group Capitalize on greater risk management flexibility and precision, advanced on-screen spreading
Slide 4: Benefits of options on futures
An option on a futures contract gives the holder the right, but not the obligation, to buy (call option) or sell (put option) a particular futures contract at a specific price on or before a specified expiration date and time, regardless of the market price of the futures contract. Benefits of 1. Ar
Slide 5: Growth in usage by a diverse array of participants
Growth in usage by a diverse array of participants Annual options ADV by asset class Who Uses Options on Futures? 3.0 Interest Rate Options Equity Index Options • Active traders 1,000 Millions • Asset Managers 2.5 Thousands 800 2.0 600 1.5 1.0 400 • Banks 0.5 200 0.0 09 10 11 12 13 14 15 16 17 18 0
Slide 6: Trading Advantages
Trading Advantages › Position for geopolitical and global-macro events › Trade volatility on 6 asset classes › Rebalance portfolios: lower slippage costs and fees than many alternatives › Potential income generation Tail Risk: GBP/USD Probability Distribution implied by options ahead of Brexit › Tra
Slide 7: Risk Management Advantages
Risk Management Advantages › Improve Sharpe Ratios—volatility can hurt returns over time. Leverage options for volatility reducing strategies › Manage a portfolio’s covariance exposure across asset classes › Hedge physical storage costs and future price changes › Trade Collar Spreads to lock in pric
Slide 8: Options Markets and Products
Options Markets and Products © 2019 CME Group. All rights reserved.
Slide 9: Record Participation and Liquidity
Record Participation 4.5 Options Average Daily Volume by Venue Electronic Open Outcry 70% and Liquidity 4.0 Privately Negotiated % Traded Electronically 60% Average Daily Volume (millions) 3.5 % Traded Electroncially 50% 3.0 Liquidity begets liquidity. An adage that 40% 2.5 has proved true in the ca
Slide 10: Delivering Liquidity to Global Participants
Delivering Liquidity to Global Participants Growth of electronic options across every asset class enables greater access to liquidity globally Percentage of Options Traded Electronically by Asset Class 100% 98% 94% 90% 80% 80% 78% 70% 69% 60% 53% 50% 40% 30% 20% 10% 0% 2009 2010 2011 2012 2013 2014
Slide 11: Extensive Range of Expirations
Extensive Range of Expirations Offering the precision to manage risk wherever it exists—from 1 day to 4 years Quarterly / Friday Wednesday Monday Calendar Average Price Monthly Daily Mid-Curve Serial Weekly Weekly Weekly Spread / Asian Interest Rates X X X X X Equity Index X X X X X FX X X X Energy
Slide 12: Robust Spreading Capabilities on CME Globex
Robust Spreading Capabilities on CME Globex Spread activity represented 60% of CME Globex options volume in 2018 All Common Strategies are Conditional Curve strategies recognized such as Trees, between Eurodollar and Mid- Create delta-neutral covered straddles and ratio spreads Curve products strate
Slide 13: Growing Liquidity Across Time-Zones
Growing Liquidity Across Time-Zones 2018 ADV › London Hours: Over 2M contracts/day +13% YoY, including a record 2.9M in February › Singapore Hours: 413K contracts/day, +40% YoY, including a record 649K in October Options ADV During Singapore Hours Options ADV During London Hours (8:00 am - 8:00 pm S
Slide 14: Calendar and Intercommodity Spread Options
Calendar and Intercommodity Spread Options Trade or hedge price spreads efficiently and eliminate leg risk › Hedge physical storage costs and future price changes Most Active Spread Options Symbol WTI 1-Mo Calendar Spread (Physical) WA › Mitigate the costs associated with rolling futures WTI-Brent "
Slide 15: Flexible Execution for Relationship-Based Trading
Flexible Execution for Relationship-Based Trading Options Blocks on CME ClearPort Both Sides of an Order—Crossing Options on Globex › CME ClearPort provides an electronic venue to submit and clear select, privately negotiated options › Specific to product, and subject to pre-ex trades with eligible
Slide 16: Did you know: you can block a delta-neutral S&P options trade at CME?
Did you know: you can block a delta-neutral S&P 500 options trade at CME? • You can block S&P 500 futures (Standard and E-mini) as part of a delta-neutral Standard S&P 500 options on futures trade • 100% of the trade can be privately negotiated and consummated, and subsequently reported to CME • Eac
Slide 17: Historical Options Market Data on DataMine
Historical Options Market Data on DataMine Refine pricing models | Find trends | Back-test strategies | Create analytics | Legal/Compliance queries CME Group Data › Block Trades › End of Day › Market By Order › Market Depth › Time and Sales › Top of Book Third-Party Data (Bantix Technologies) › End
Slide 18: Options Tools
Options Tools © 2019 CME Group. All rights reserved.
Slide 19: QuikStrike Option Pricing & Analysis Tools
QuikStrike® Option Pricing & Analysis Tools Trade smarter and more decisively with our suite of options analytics, provided by QuikStrike® FEATURED TOOLS QuikStrike Essentials: The base version of QuikStrike’s benchmark pricing and analysis platform offers an all-in-one tool for analyzing volatility
Slide 20: Tool Spotlight: Open Interest Heatmap
Tool Spotlight: Open Interest Heatmap cmegroup.com/oiheatmap Gain insight into market sentiment through the lens of put/call open interest • Track the concentration of put/call positions across strikes for all listed expiration on a specific underlying • See how the market has evolved over the last
Slide 21: Tool Spotlight: Cross-Asset Correlation Tool
Tool Spotlight: Cross-Asset Correlation Tool cmegroup.com/correlation-tool Optimize a portfolio’s covariance exposure with options across all major benchmark futures: • Track product relationships to identify how activity in one market might affect another • Three ways to analyze correlations: - Dai
Slide 22: Appendix
Appendix © 2019 CME Group. All rights reserved.
Slide 23: Weekly Options Codes
Contract Expiry CME Globex Bloomberg Reuters Equity Options Weekly E-mini S&P 500 Monday Wednesday E1A-E5A E1C-E5A IWWA Index IEWA Index 0#1AEW+ 0#ECW+ Options Friday EW1-EW4 1EA Index - 4EA Index 0#ESW+ Monday S1A-S5A SVPWA Index 0#1ASW+ Standard S&P 500 Wednesday S1C-S5C SPWA Index 0#SCW+ Codes E-
Slide 24: Most Active Options
Most Active Options 2018 2018 2017 Product Product Group Primary Symbol ADV % YoY % Globex Open Interest Rank Rank 1 1 Eurodollars Interest Rates GE 1,415,619 3% 33% 41,240,443 2 2 E-mini S&P 500 Equity Index ES 760,542 26% 100% 3,653,405 3 3 10-Year Note Interest Rates OZN 666,519 30% 81% 3,366,837
Slide 25: Education
Education Gain a better understanding of options fundamentals, strategies, and terminology with options courses on CME Institute. Course 1: Intro to Options Course 2: Strategies Course 3: The Greeks • Introduction to Options • Straddles • Delta • Understanding Option Contract Details • Strangles • G
Slide 26: Contact Our Options Product Experts
Contact Our Options Product Experts Interest Rate Options Equity Index Options FX Options Dave Reif Tom Boggs Craig LeVeille +1 312 648 3839 +1 312 930 3038 +1 312 454 5301 David.Reif@cmegroup.com Thomas.Boggs@cmegroup.com Craig.LeVeille@cmegroup.com Energy Options Agricultural Options Metals Option
Slide 27: Disclaimer
Disclaimer Neither futures trading nor swaps trading are suitable for all investors, and each involves the risk of loss. Swaps trading should only be undertaken by investors who are Eligible Contract Participants (ECPs) within the meaning of Section 1a(18) of the Commodity Exchange Act. Futures and