Trading volumes expand at CBOE, CME in September

The trading floor at the Chicago Board of Trade. CME Group owns the CBOT. Photo by Hamsa Ramesha.
The trading floor at the Chicago Board of Trade. CME Group owns the CBOT. Photo by Hamsa Ramesha/MEDILL

By Nicholas Heinzmann

Average daily trading volume at the Chicago Board Options Exchange and CME Group strengthened in September, reflecting growth of an expanded options offering and an upturn in the number of bets traders are making on Federal Reserve interest-rate moves.

Total average daily volume at CBOE, which includes for both options and futures trading, rose 10 percent in September, to 5.19 million contracts from 4.72 million in August.

Much of that growth was fueled by continued growth in demand for “Weeklys”options, a type of derivative that provides expiration opportunities every week. Weeklys provide different kinds of benefits for investors as the value of their option changes over time, said Russell Rhoads, a senior instructor with the Options Institute at the Chicago Board Options Exchange.

While CBOE reported growth for consolidated options and futures trading in September, average daily volume for the options exchange’s benchmark volatility index futures fell 18 percent, to 178,531 contracts per day from 216,996.

“That’s more like a one-off event,” Rhoads said of the drop in September VIX, or volatility index, futures. “We had some high volatility days in August,” he said, which tends to coincide with higher trading volumes. Less volatility in September lowered trading volume compared with the previous month.

CME Group averaged 15.3 million contracts in September, a 14 percent increase compared with the month before and a 17 percent increase from the year before.

The centerpiece of that growth was interest rate contract volume, which averaged 8.1 million contracts per day in September, up 9.6 percent compared with August and 23 percent compared with one year ago.

“Interest-rate derivatives activity has been on a stronger trend this year compared to 2013,” Morningstar Inc. analyst Gaston Ceron said. “Obviously this continued in September with a pretty strong month for interest-rate trading.” Uncertainty about when the Federal Reserve will raise interest rates has bolstered growth in interest rate futures.

CBOE shares rose $0.90, or 1.68 percent to $54.34 at 4 p.m. on the Nasdaq. CME also rose, to $80.42, up $1.02 or 1.28 percent.