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The Long & Short of Futures Options

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The Long and Short of Futures Options: Election Volatility and the Rise of Weeklies

Oct 11, 2016

On this episode, Mark is joined by Blu Putnam, Chief Economist, CME Group and Tim McCourt, Global Head of Equity Products, CME Group.

They discuss:

  • What are some potential drivers of market volatility?
  • Paper: Equity Volatility in 2016 and Beyond
  • Paper: Calm Before the Volatility Storm in Equities?
  • What are some potential drivers of volatility in the near future?
  • Earnings season
  • The election
  • The Fed?
  • What impact, if any, will these have on the broad equity markets?
  • Rise of the Weeklies
  • Why launch a Wednesday weekly? What additional value does this product bring to customers?

Listener questions: Discussing what you want to know

  • Question from Vegs - I am seeing lots of big fat options OI tied to the big ES 2200 strike. Does this mean big traders are betting that the S&P will rally past 2200? Can all of this open interest have the net effect of forcing the S&P to that strike at expiration? Do you view this open interest solely coming from pros or are retail reflected there as well?
  • Question from TCal - I am a somewhat new oil options trader primarily in WTI. Over the last few months I have noticed that the majority of volume trades in the front month. This is particularly true in active weeks such as during the OPEC meeting. I have had success buying weekly options going into these events. But in these same active periods I have not seen the surge of activity in the weekly WTI that I expected. This is surprising given the similar interest in weeklies in most other option products. Is this a function of the large institutional presence in WTI options? Perhaps there is a nuance of the product that I am missing that is not conducive to weeklies? I would appreciate your insight into this. Thank you for producing so much great free programming on your network.