Options trading on exchange-traded funds (ETFs) has grown nearly 8,800% in the last 11 years, and now far exceeds the trading of index options, according to data from OCC, the organization formerly known as the Options Clearing Corp.
Trading in the ETF options totaled more than 1.2 billion contracts in 2010, up from 14 million in 2000, according to the OCC.
Trading in all options segments — equity, index and ETFs — has seen great growth in the last decade, jumping nearly 530% since 2000 when a total of 726.8 million contracts traded, according to OCC data. Equity option volume has grown by about 360% while trading in index options has grown about 530%.
Last year there were nearly 3.9 billion options contracts traded with equity options trading nearly 2.4 billion contracts, or 60% of the volume, ETFs seeing more than 1.2 billion contracts, or 32%, and index options accounting for nearly 289 million contracts, or about 7% of the total. A similar percentage breakdown continued through the first quarter of 2011.
In contrast, in the year 2000 equity options accounted for about 91% of all options trading, index options for about 7.4%, and ETF options for the rest.
In the first quarter of 2011 the ETFs with the most option volume were:
SPY — SPDR S&P 500 (NYSE: SPY) – 138,568,368 contracts
IWM — iShares Russell 2000 Index (NYSE: IWM) – 36,853,913
QQQ — PowerShares QQQ (NASDAQ: QQQ) – 30,668,577
EEM — iShares MSCI Emerging Markets Index (NYSE: EEM) – 18,826,688
XLF — Financial Select SPDR (NYSE: XLF) – 16,157,420