In this report
- Options lead the way in 2023
- Traders turn to weekly options amid Crude Oil volatility
- Tuesday and Thursday FX options expiries
- The rise of short-term options in helping manage risk
- Mid-curve options, maximum flexibility
- Gold shining brightly in 2023
- Copper volatility triggers a surge in trading volumes
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Options lead the way in 2023
Options has started off 2023 from a strong position, with 360M contracts traded and ADV of 5.6M making for a record quarter.
In addition to this overall options growth, we have seen a number of records across the Options complex with Weekly Options experiencing continued momentum hitting a record weekly ADV of 1.44M for Q1 2023. Equity Index and Interest Rates also reached records of 1.3M and 3.8M concurrently.
The strong growth we have seen has been driven by new participants, more product choice and the extreme volatility of late. Options allows clients to manage risk in these uncertain times and protect their portfolios amid the volatile market landscape.
Traders turn to weekly options amid Crude Oil volatility
It was a record quarter for WTI Crude Oil Weekly options, with a record 8.7K ADV in Q1 2023 and record average OI of 20,330.
In Q1 2023, close to 3,500 users from 87 different countries traded WTI Crude Oil Weekly options, a 10% quarter-over-quarter increase. Over 80% of weekly crude traders also trade CME Group WTI Crude Oil Monthly options.
The option with seven days to expiration contract is the most popular by volume. Traders are utilizing crude oil weeklies to efficiently hedge market-moving events over the course of a full week.
Tuesday and Thursday FX options expiries
With the launch of Tuesday and Thursday options last December, CME FX options now lists expiries every day out to two weeks, allowing traders to achieve better granularity in their hedging or positioning, particularly around key economic events.
The rise of short-term options in helping manage risk
Agricultural risk management is evolving with market participants utilizing short-term options to better refine and isolate risk. New Crop Weekly options launched January 23, extending risk management capabilities for Corn and Soybeans. Agricultural short-term options set multiple records during Q1 2023 with record participation. Visit the Agricultural short-term options page to learn more about our product suite.
- The Agricultural Weekly options complex set a single-day volume record of 57,314 on March 31.
- Three products set all-time quarterly ADV records:
- Soybean Meal Weekly Q1 ADV – 849
- Soybean Weekly Q1 ADV- 2,493
- Chicago Wheat Weekly Q1 ADV – 1,452
- New Crop Weekly options averaged over 500 contracts a day and reached 5K contracts of open interest leading up to the prospective planting report.
- Short-Dated New Crop Soybean options posted the best first quarter ever with 1.9K ADV.
Learn why small-cap indexes like the Russell 2000 have historically outperformed their large-cap counterparts and how an options strategy can help you manage your risk while expressing an opinion on the index.
Mid-curve options, maximum flexibility
Looking for greater flexibility in the front of the SOFR curve? 3-Month, 6-Month, and 9-Month SOFR Mid-Curve options provide traders with short-dated options on white quarterly SOFR futures. Mid-Curve options expire in the near term but reference a longer-dated futures contract. See the key details about this new risk management tool.
Gold shining brightly in 2023
Gold Weekly options adoption has continued its upward trend. Year-to-date ADV is 61K contracts, 24% higher than the ADV in 2022.
Gold Wednesday Weekly options April ADV of 2,361 contracts was the highest since launch.
Copper volatility triggers a surge in trading volumes
Copper options volume increased in Q1, partly fueled by the easing of lock-down measures in China and heightened market volatility. ADV surpassed 8K contracts, with OI reaching a record high of over 180K contracts on February 21. This has resulted in a sharp increase in on-screen liquidity across monthly and weekly options.
Bid-ask spreads have been close to half a vol point wide on outright options. RFQ responses for option spreads have developed to be on par with Gold and Silver options RFQ responses.
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All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.