EXCLUSIVE: SPX Options Volume Is 2.5X From 2008 Levels, ETF Options Up 60% YoY, OCC's Mat Cashman On Volume Explosion, 0DTE

Back in 2008, the number of options contracts traded on the S&P 500 Index was about 4.3 billion. That figure is now 2.5X that.

This fact was brought to light by Mat Cashman, principal, investor education at the Options Clearing Corporation (OCC), at an exclusive Benzinga Fintech Deal Day & Awards event on Monday.

The OCC has been around 50 years now and is the largest centralized clearing facility for options in the world. It clears north of 10 million contracts a year.

The organization “might close 11 billion this year,” Cashman told moderator Renato Leonard Capel, head of Fintech Strategy at Benzinga, during a discussion on “Building Strong Foundations: The OCC's Commitment to Secure and Informed Markets.”

Cashman has worked both on the trading side and the clearing side of the options market. A saxophone player at heart, Cashman gathered a wealth of trading experience at DRW, Toro Capital, WH Trading and Mark IV Brokerage before he joined the clearing side at OCC in September 2021.

On Options Volume Explosion

Cashman shared some key insights into the options market with Benzinga. Among these were:

• The SPX options trading volume is up 2.5X now from 2008 levels of 4.3 billion contracts.
• Volume over the past five years gradually moved up, followed by a huge leap in 2020 during the COVID-19 pandemic.
  

3 key reasons identified by Cashman for the huge 2020 leap in volume included:

• Stimulus checks
• Frictionless access to zero-cost brokerage
• The fact that many people were just stuck on their couches looking for something to do.
  

Cashman believed these volume growth numbers are very sticky.

He’s also noticed a rotation into different products. For example, from the single stock option volume that was driven by the meme stock craze, there’s now rotation into ETF volume: ETF options volume is up over 60% YoY.

People are now waking up to the flexibility of options, more broadly, in different asset classes per their goals.

On 0DTE Options

Brushing the hype over 0DTE options aside, Cashman said that it is just an option that has come to the end of its life cycle. He acknowledged the flexibility that exists with these products and the granularity that they provide — something that didn’t exist five years ago.

0DTE options allow people “to hedge very discreet risk events, in a very granular way,” since they can hedge for a particular day.

On Defined Outcome ETF Options

Cashman’s messaging on defined outcome ETF options is very clear: “It is not rocket science,” he said.

While the ETF package does give an incredible amount of flexibility and convenience, its strategy can be easily replicated. The defined outcome ETFs essentially use a yield vehicle and an option trade, so they’re using the coupon from the yield vehicle to pay for the options.

Photo: Mat Cashman, Renato Leonard Capej at Benzinga Fintech Deal Day & Awards 2023, photo by Piboon Thongtanyong