Index Volume in 2013 – SPX Options up 19%, VIX Options Up 29%, and VIX Futures up 67%

In the year 2013 a number of key index contracts hit new all-time records for trading volume.  As shown in the colored column graphs below, (1) average daily volume for options on the S&P 500® Index (SPX) rose from 697,829 in 2012 to 823,369 in 2013, an increase of 19%, (2) average daily volume for VIX® options rose from 442,959 in 2012 to 567,460 in 2013, an increase of 29%, and (3) average daily volume for VIX futures rose from 95,143 in 2012 to 159,498 in 2013, an increase of 67%.

PUT/CALL RATIOS.  The right column of first table below shows the put/call ratios for 15 index options at CBOE in 2013.  The put/call ratios for the SPX, RUT, NDX, OEX and XSP (mini-SPX) stock index options all were above 1.2, while the put/call ratios for options on the VIX, RVX, OVX and VXEEM volatility indexes all were below 0.77.   The price movements of stock indexes compared with volatility indexes often are negatively correlated. The put/call ratios provide evidence to suggest the possibility that many investors may use stock index and volatility options for protective purposes.  Some of the simpler protective strategies for investors who hold stock portfolios are — (1) buy stock index protective put options, (2) buy call options on volatility index(es) and (3) buy volatility index futures. To learn more about options and volatility strategies and risk portfolio management, please visit http://www.cboe.com/Strategies.

112Index Futures volume and open int 2013 111Index options volume & open int 2013