OCC Sets New Records; Cboe’s Reports Record Options Volume; Remembering R.J. O’Brien – THE SPREAD – January 7, 2022

Alex Perry’s Optionstopia 

 takes a look at this week’s options news highlights, including remembering Robert J. O’Brien, Sr.

Options News Script

This week…the OCC is setting record highs, Robinhood is expanding its options platform, and finally…we end the week by remembering an industry giant: Robert J. O’Brien, Sr.

This is Alex with John Lothian News, and this is your recap of options news from the week. Here’s some of the week’s top stories, starting with:

1- OCC Clears Record-Setting 9.93 Billion Total Contracts in 2021
/yhoo.it/3HFymBP 
https://www.businesswire.com/news/home/20220104005239/en/
https://twitter.com/OptionsClearing/status/1478370919705980934

[OCC] The Options Clearing Corporation ended 2021 on a high note…a note so high that it set new records; clearing 9.87 billion options contracts and 9.93 billion total contracts. When compared to the previous year’s numbers of just 7.47 billion options contracts in 2020… that’s a whopping 32.2 percent increase in options contracts. Overall, it’s safe to say that 2021 was the breakout year for options trading, which skyrocketed in popularity. So it stands to reason why the OCC’s December 2021 options volume was also up nearly 12 percent when compared to December 2020, with a volume of over 845 million.

2-Cboe’s 2021 Volume Report Shows record Options Volume

But the record-setting didn’t end with the OCC, because this week, the Cboe also reached new heights of its own. The Cboe’s 2021 volume report showed a 19 percent increase from 2020, with 3 billion contracts traded. Not only that, but their total options average daily volume managed to reach an all-time high of 12.1 million contracts in 2021.

3-ICE Announces Record MICRO NYSE FANG+™ Index Futures Traded
/jlne.ws/3qTCgQz

If the record-shattering wasn’t enough…the Intercontinental Exchange, or ICE, got in on the fun too, announcing this week that a record 27,876 Micro FANG+ Index futures had traded on January fourth. The FANG+ Index tracks stocks from the biggest tech corporations, including Facebook (now Meta), Amazon, Netflix, and Alphabet (or Google), but other companies such as Alibaba, Tesla, and most recently Microsoft, are added to the index, hence the Fang plus. Needless to say, The year 2022 is already starting off pretty strong for ICE’s MICRO New York Stock Exchange FANG+™ Index Futures. ICE’s Chief Strategy Officer David Goone agrees, saying that “It is great to see that 2022 has started with such strong activity…showing the continued importance of these stocks to the investor community.”

4- Robinhood to Expand Options Contract Feature to More Traders
Mark Gurman and Annie Massa – Bloomberg
/bloom.bg/3mJtoMb
Robinhood wants to give first-time traders investment advice. Here are all the reasons to be concerned.
/jlne.ws/3qSYXEp

In other news, Robinhood is once again making headlines. The stock-trading platform was widely known for its hand in the Gamestop frenzy early last year…when it prevented users from buying GameStop stocks and garnered plenty of backlash. Well… a year later, the mobile app is expanding on an in-app tool called ‘options rolling,’ but the feature has only been available to a certain number of users.Options rolling is when a trader closes and simultaneously opens a new position…but with a different date and price this time. When considering Bloomberg’s report that options activity “brought in about 61% of the firm’s third-quarter trading revenue,” it’s easier to see why Robinhood would want to expand the feature to more and more traders. Not to mention that while expanding the tool’s accessibility, the platform will also expand its education efforts by providing advising services to new customers and investors with a service called “First Trade Recommendations”. This means that Robinhood’s customers may get both a crash course in investing and the rolling options feature… sooner, rather than later.

5- Chicago Board of Trade Floor Becomes Power Facility
https://www.chicagobusiness.com/commercial-real-estate/comed-turning-former-cme-trading-pit-substation
https://chicago.suntimes.com/business/2022/1/3/22865798/former-futures-trading-floor-become-substation

Anyone who knows about trading should be familiar with the Chicago Board of Trade Building, since the CBOT is one of the oldest exchanges for trading futures and options contracts… and it housed the historic trading floor of the CBOT which became part of the CME Group in 2007..,Most trading floors had already closed down during the transition to electronic trading. But once the pandemic raged, the CME essentially kissed the floor goodbye. Now the CME has sold the 1998 addition to the CBOT Building, known as the “Arboretum” trading floor, to ComEd, which will turn it into a power facility.
The “Arboretum” was named after former CBOT Chair Pat Arbor, who built the world’s largest trading floor. . Crain’s Chicago Business reported that the ComEd purchase was in an effort to “generate more power for downtown.” The trading floor was built in 1998… and if you don’t feel old enough yet, not only was it the same year that I was born, but also the same year that Google was founded, President Clinton got impeached.. and Blockbuster was still a thing! And now, our little piece of history will be converted… into a new substation. In the words of our own John Lothian, it “Could have made a nice parking garage, but who needs to park in the Loop anymore?”

6- – Robert J. O’Brien, Sr Passes Away at 103

And in some sad news, we couldn’t end this week’s episode without mentioning the brokerage and exchange leader and industry giant: Robert J. O’Brien, Sr. who passed away at the age of 103. O’Brien was the last surviving founding member firm of the Chicago Mercantile Exchange, now CME Group, and served as the chairman e-MER-ritus for the Chicago-based firm R.J. O’Brien & Associates (RJO). Several years ago, John Lothian News had the pleasure of helping O’Brien tell his story in the RJO centennial video.

We here at JLN honor his life…and legacy.

Speaking of significant impacts, this week’s edition of John’s Take talks about the Cboe’s Empowerment Program. Also, be sure to check out this week’s “Options Term of the Week,” with Tom Jarck of MIAX.

THIS HAS BEEN ALEX PERRY FOR JLN. THANKS, AND WE’LL SEE YOU NEXT TIME.

John’s Take

Cboe’s Empowerment Program is the theme of ”John’s Take”

John's Take Script

This is John Lothian for The Spread with John’s Take

The more I see Ed Tilly operate in his role as executive chairman and CEO of Cboe Global Markets, the more I appreciate what a good job his predecessor Bill Brodsky did not only in grooming him for his corporate role, but in passing on the baton of Chicago financial markets civic leadership. For me, Bill epitomized the great Chicago civic and market leaders that founded and led the institutions that make Chicago a great city.

Tilly has continued that tradition through his individual civic and nonprofit leadership and broadened it through the entire Cboe organization (5) with initiatives like Cboe Empowers. This community engagement initiative (6) announced in June includes a program that builds on Cboe’s years of community engagement, including 20 years of Cboe associates tutoring over 600 students at the John B. Drake Elementary School. But this is not just about Chicago, Cboe has plans to expand it beyond its home city. 

The Cboe’s Empowers Scholarship program has a January 31 deadline approaching for applications for five full-ride scholarships to four-year universities for African-American and Latinx students from neighborhoods on Chicago’s South or West sides, so I interviewed Kelli Haywood, Cboe’s community impact manager. I asked her to introduce herself and tell us about Cboe Empowers.

From Audio: This is a fantastic opportunity for some young people who would value the welcoming hand and the support and mentoring of a great organization like the Cboe. I hope the message of these scholarships is spread far and wide, demand is great, and Mr. Tilly and Cboe do even bigger things in the years to come as a result of the success they achieve and track with these first five scholarships. 

This has been John Lothian for The Spread.

Term of the Week

Tom Jarck of MIAX takes us through the “Options Term of the Week.”

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ALEX PERRY

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Alex Perry is an Associate Editor with John Lothian News with a primary portfolio of contributing to the options-centric video series The Spread and options related news.

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CFTC History Made with Four Women Commissioners; CME Group Launches Micro-Sized Options; Meme Stocks Surge in Trading … Again

Alex Perry Author John Lothian News ALEX PERRY’S OPTIONSTOPIA: “Alex Perry’s Optionstopia” takes a look at this week’s options news highlights: CFTC History Made with Four Women Commissioners; CME Group Launches Micro-Sized Options; Meme Stocks Surge in Trading

TERM OF THE WEEK: Euronext presents “Options Term of the Week”. The difference between market and exercise price. 

John’s Take: Why I hate Chuck Mackie and Thoughts on FTX’s CFTC Request

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I have a love/hate relationship with Chuck Mackie. I love him because he is a great guy, good citizen and cheerful practitioner of solving the world’s problems with market based solutions. I hate him because he really knows how to make me work, and work hard. Don’t worry, there are others on this list too (Hello Barbara).

On Thursday Chuck emailed me and asked when I was going to write a comment letter for the FTX request to the CFTC for LedgerX LLC, doing business as FTX US Derivatives, “to amend its order of registration as a DCO to allow it to modify its existing non-intermediated model.”

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