Q1 2023 Options Update

  • 13 Feb 2023
  • By CME Group

A record year for options

Over 1B contracts traded in 2022, making it a record year in options trading. This volume creates greater liquidity, tighter spreads, and more flexibility when trading options.

Asset class highlights:

  • Equity Index options outperformed in 2022, with record ADV for Equity Index options for each quarter and the entire year
  • SOFR options ADV overtook ED options ADV in Q3 2022, closing 2022 with SOFR ADV at 899K and ED ADV at 495K in Q4 2022. SOFR options are now among the most liquid contracts in the world.
  • Base metals performed strongly in Q4 2022, with Aluminum and Copper options reaching records with a combined ADV of over 14K

We're excited to see what new trends and opportunities this year brings to the options market.

Source: CME Group

The rise of the short dated weekly option

Over the last year there has been continued strong demand for short term liquidity, propelling a significant increase in the trading of short dated weekly options.

In 2022, weekly options made up almost 30% of total Options ADV.

Source: CME Group

Copper price increases see market participants turn to Copper options

Adoption of Copper options (HX) is at an all-time high. As a result of China recently dropping its COVID-19 policies and providing more fiscal stimulus, we have seen a rally in Copper options.

ADV at the start of 2023 is 10.5K contracts, +700% vs. Jan 2022 (as of Jan 23), with an all-time high OI of 147K contracts (as of Jan 25).

Source: CME Group

Participation in Gold Weekly options increases as gold surges

The price of gold has traded above $1,900 for the first time in over six months. Opposing economic forces have made gold an attractive market to express a shorter-term hedge, and activity in Gold Weekly options has seen a substantial upturn. 

Macro data points that typically move gold prices continue to be in play; dollar strength, rising rates, and higher inflation. But the recent ease of travel restrictions in China and moving away from a zero-COVID-19 policy provides one counterweight to predominant sentiment of a looming global recession.

Liquidity in Monday, Wednesday, and Friday expiries has grown to the same level as the monthly contract as gold continues to draw more focus. Last year we saw a record 11.3K ADV across the complex.

Source: CME Group

Discover volatility indexes on key global benchmarks: CME Group Volatility Index (CVOL)

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Excell with Options: 2022 Year in Review

Get a breakdown of current market news and events paired with guidance on how to use options on futures to hedge or express a related opinion. 

In this issue, we look back on all of the ideas generated in 2022 to see how these options strategies performed once the dust settled.

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