Cboe Data Reveals Intraday Option Trades Are On The Rise

Cboe Global Markets CBOE has reported an increase in intraday options trading, indicating a fundamental shift in how market participants engage with options.

Edward Tilly, the chairman and CEO of Cboe, stated that there has been a fundamental evolution in options trading, with many market participants now opening and trading positions on the same day that options expire. Cboe reported a 29% increase in total net revenue for Q1 for its derivatives business, driven by the strength of index options and volatility products and solid volumes in multi-list options trading.

The average daily volume for S&P 500 (SPX) options experienced a substantial increase during Q1, reaching a record of 2.8 million contracts during the quarter. Tilly highlighted that recent enhancements in options trading, such as expanded trading hours and new expirations, have created new opportunities for customers. He stated, "We continued to see many market participants opening and trading positions on the same day the options expire, as they engaged in tactical trading strategies around market events." Tilly believes this trend indicates a significant change in how customers trade options and anticipates that this volume will continue to rise.

Cboe also introduced the Cboe 1-Day Volatility Index to cater to the growing demand for same-day options trading. The launch of this index, which measures the expected volatility of the S&P 500 index over the current trading day, aligns with the increasing interest in short-term exposure and trading based on daily news cycles. Tilly mentioned that the explosive growth of same-day options trading began about a year ago, primarily driven by retail platforms, but institutional adoption is now increasing.

Regarding Cboe's digital business, Tilly stated that the platform continued to onboard new participants, with liquidity deepening and spreads becoming more competitive. The first quarter saw a record of $7.4 billion traded on Cboe Digital, which includes ErisX, an operator of a US-based digital asset spot market, a regulated futures exchange, and a regulated clearinghouse. Cboe is also awaiting approval from the Commodity Futures Trading Commission (CFTC) for margin futures, which, once granted, will allow clients to trade spot crypto alongside margin derivatives, providing efficiency in terms of capital requirements and connectivity to multiple platforms.

Cboe's international volumes have witnessed growth, particularly among non-U.S. customers and liquidity providers trading SPX and VIX products across all time zones. The Global Trading Hours session experienced a substantial increase in average daily volume for SPX and VIX options, reflecting the demand for trading during extended hours.

In terms of financials, Cboe reported a 13% year-on-year increase in net revenue for Q1, reaching a record $471 million. The derivatives franchise contributed to the highest growth, with options delivering a 28% increase in net revenue. Cboe also expects an uptake in demand for its data products following recent technology migrations in Australia and anticipates increased demand for Cboe data globally.

Overall, Cboe's Q1 results highlight the growing popularity of intraday options trading and the company's success in expanding its offerings, attracting new participants and advancing strategic initiatives in derivatives, data and access solutions, and digital assets.

Featured photo by Behnam Norouzi on Unsplash.

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