The FIA Expo conference featured a panel late this morning titled “Equity Options Exchange Leaders Discuss the Prospects for Growth.” Attendance was good – The Mayor of Chicago giving opening remarks this morning got the attendees to the Chicago Hilton on time!
The panel —
— was chaired by Mr. Tom Sosnoff, Chief Executive Officer, tastytrade,
— featured panelist Edward Provost, Chief Business Development Officer, Chicago Board Options Exchange.
Mr. Sosnoff asked if the options industry was being commoditized.
Mr. Provost said that CBOE is proud of the fact that CBOE continues to be a leader in product innovation, from its introduction of listed options in 1973, to the introduction of a very successful volatility product line in recent years.
Mr. Sosnoff says the average stock trade is about 1,000 shares, and if you assume $40 per share, that is a commitment of about $40,000. He asked if certain options strategies can be efficient uses of capital.
Mr. Provost said that studies on BXM and PUT show that consistent selling of richly priced one-month index options over multiple decades has had strong returns and lower volatility than stocks.
Mr. Sosnoff responded to Mr. Provost — “You are 100% correct.” And that more frequent trading of options strategies that tend to be profitable could help investors’ profits.
Several comments were made regarding importance of financial education. Mr. Provost said CBOE is very involved with many educational events, including bringing in registered investment advisers (RIAs) for educational sessions and speaking at CFA (chartered financial analyst) societies.
Mr. Sosnoff talked about the possibility of using games to provide education on options, and that in the future people who open brokerage accounts could open option accounts too.
The audience had some questions —
> Isn’t education re account maintenance very important?
> Is the options volume suffering because of poor equity market performance?
Mr. Provost noted that the options markets have experienced higher volume growth rates than the stock markets.