The Spread: It can only go up from here

Matt Raebel

Matt Raebel


Welcome to The Spread, I’m Matt Raebel.

2020 was a lot of things, most of them pretty bad…but it was a banner year for options traders. And options exchanges!

Cboe finally finished its acquisition of BIDS up earlier this week. Plus Miami International Holdings, parent company of MIAX, completed its acquisition of MGEX and the Bermuda Exchange. You know, making investments and paving the way for future growth.

Cboe also recently reported that its total 2020 U.S. equity options ADV was up by almost 39 percent, and Nasdaq said it led all exchanges in traded equity options for the eleventh consecutive year! (Golf clap)

Even crypto options saw all-time highs for trading volume and open interest this week. That was despite the U.K. FCA’s ban on the sale of cryptocurrency derivatives and ETPs, which went into effect Wednesday.

The OCC, of course, had a great year as well; the organization cleared seven and a half billion contracts last year thanks to crazy-high trading volumes – most of which were options – and it cleared seven hundred and fifty million contracts in December alone, making it the OCC’s biggest month ever for cleared contract volume. With that many contracts to juggle, it’s a wonder they didn’t drop any of them.

Not all indexes have had the same success though. Options volume on the Nikkei 225 has been flagging due to decreased volatility on Japanese stocks; open interest hit its lowest point since 2009 in late December 2020. But hey – maybe in 2021, things will turn around and this time next year we’ll be talking about it like the Little Index That Could – not that the Nikkei 225 is “little,” necessarily, but it does seem like it’s chugging up a rather steep hill lately.

Also, the Hong Kong Exchange finally explained what was up with the derivatives trading halt back in September 2019, when a technical glitch forced all derivatives trading through HKEX to a grinding halt. According to the exchange’s report, the problem came from a matching engine supported by a third-party vendor that had minor logic hiccup. Not the most exciting answer, I know; I still prefer my theory, where someone was enacting a similar plan as the Bond villain from “GoldenEye,” but in this case, the doomsday weapon they used was off-brand. Oh well.

Be sure to check out John Lothian News dot com for more news and videos like this one, including our newest edition of Path to Electronic Trading: JLN Editor Suzanne Cosgrove’s two-part interview with former Cboe Global Markets chairman and CEO Bill Brodsky. It’s definitely worth taking a look whether you want a great history lesson or a bit of nostalgia. That’s gonna do it for The Spread this week – until next time, stay safe and happy trading.


Miami International Holdings Completes Acquisition of Minneapolis Grain Exchange
PR Newswire

Miami International Holdings Acquires 100% Ownership of The Bermuda Stock Exchange
PR Newswire

Cboe Global Markets Completes Acquisition of BIDS Trading, the Largest Independent Block Trading ATS in the U.S.

Cboe Global Markets Reports Trading Volume for December and Full Year 2020

Nasdaq Led all Exchanges in 2020 Equity Options Trading

OCC Clears Record-Setting 7.52 Billion Total Contracts in 2020
Open interest on Bitcoin derivatives reached an all-time high on Sunday
MK Manoylov – The Block

Open interest on Bitcoin derivatives reached an all-time high on Sunday
MK Manoylov – The Block

Open interest on Ethereum derivatives hit an all-time high on Sunday
MK Manoylov – The Block

UK’s Crypto Derivatives Ban Starts Today
Bilal Jafar – Finance Magnates

Nikkei 225 Options Interest Drops to Decade Low After Rally
Min Jeong Lee and Toshiro Hasegawa – Bloomberg

HKEx explains trading glitch
Avery Chen – Hong Kong Standard

Bill Brodsky – The Path To Electronic Trading Part 1
Suzanne Cosgrove – JLN

Bill Brodsky – The Path To Electronic Trading, Part 2
Suzanne Cosgrove – JLN

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Past The Spread Episodes

The Spread: Tiger Billionaire

The Spread: Tiger Billionaire

This week on The Spread, the unregulated crypto exchange Deribit announces a bitcoin volatility index, the CME says over 1 million micro e-mini equity options contracts traded, and more.

The Spread: Moonshot

The Spread: Moonshot

This week on The Spread, bitcoin options hit records for bullishness, the OCC adds two industry veterans to its board of directors, and more.

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