US Options Trading Volume Up While European Options Trading Volume Drops

When it comes to options trading volume, it appears as though the European money woes are causing problems in Europe but not here in the United States. The following article takes a look at the picture both in the US and in Europe.

There is a growing split between US and European equity derivatives trading according to November’s trading statistics. In fact, US options trading rose 10% year-over-year in November while European options trading sank by nearly one third.

Specifically, Amex increased its share of the competitive US market from 12.83% to 14.5% in November while Arca increased its share from 10.26% to 11.49%.

On the other hand, European equity investors were apparently spooked by persistent volatility in the cash markets as sharp price movements show a lack of market liquidity as market makers withdraw due to volatile trading. For the month of November, 1.2 million single stock futures and options on average changed hands per day on the NYSE Liffe. This trading volume is down 30.4% over last year.

Meanwhile, trading volumes released by the London Stock Exchange indicated a similar pattern as trading on that exchange was down 20% year-over-year. In addition, LSE cash market turnover fell 5% to £178.4 billion in November verses 12 months earlier.

As for the US options trading market, it appears to be set for another record year in 2011. So far, 3.9 billion contracts have been traded across the market’s nine exchanges for the first 11 months of the year – a 19.3% increase over 2010.

Analysts point out that the use of options contracts for hedging strategies – even by vanilla fund managers. In fact, US managers now make up 20% of the options trading market.

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