Trading in stocks and options during 2020 broke all-time volume records, and early data in 2021 suggests trading activity hasn’t peaked yet.
2020 was a historic year in terms of stock trading volumes on U.S. exchanges. Not surprisingly, options markets also experienced record-breaking growth. Interestingly, early data from the first few weeks of January suggests the 2021 trading year could be even bigger.
In calendar year 2019, volume in single-stock options averaged about 10 million contracts per day. That number skyrocketed to 17 million in 2020, with the latter part of the year seeing some of the highest volumes in history. December 2020 set the record for average daily volume in a single month—more than 23 million contracts per day.
The Options Clearing Corporation (OCC), which specializes in the clearing of derivatives contracts, estimates that 7.47 billion options contracts traded hands in 2020, up from roughly 4.90 billion in 2019—an increase of more than 52%.
And the surge in activity hasn’t been limited to a single exchange, with virtually all options marketplaces seeing mammoth growth in 2020. The figures below highlight some of the 2020 exchange statistics in greater detail:
- Nasdaq Inc. (NDAQ): Nasdaq exchanges reported a 52% increase in options volumes during 2020, as compared to 2019. The exchange processed 365 million trades (constituting roughly 2.5 billion contracts) in 2020.
- CBOE Global Markets (CBOE): The Chicago-based exchange operator saw a 38% increase in options trading volume during 2020 as compared to 2019, with more than 2.7 billion contracts trading hands across the firm’s four major platforms (Cboe Options, Cboe BZX, Cboe C2 and Cboe EDGX).
- CME Group (CME): The CME Group likewise saw strong increases in options volumes during 2020, averaging 5.6 million contracts a day, which was 63% higher than in 2019. Trading in E-mini S&P 500 options and futures was especially strong.
Intriguingly, the fervor in options trading has only grown stronger with the onset of a new trading year. On Jan. 15, 2021, a new daily record was set with over 49 million contracts trading hands in a single day. Jaw-dropping activity—especially when one recalls that the average number of contracts traded per day in 2019 was 10 million.
Adding further perspective to the tidal wave of options activity in 2021, consider that the total number of contracts trading hands during the first 10 trading days of 2021 are roughly equivalent to the total volume observed during the first four months of 2004 (400 million contracts).
And the surge in options trading hasn’t been limited to equity options, either. Options trading in other financial assets, such as cryptocurrencies, has also seen a spike in interest.
For example, the cryptocurrency options trading platform Deribit announced that total crypto-related options trading conducted to date in 2021 already represents 25% of the total volume observed in 2020. That’s incredible, given that the first full month of 2021 isn’t even in the books.
Along those lines, a record $3.7 billion in bitcoin-associated options are set to expire on Jan. 29—another record. This activity comes on the heels of a recent price spike in bitcoin’s value, which saw the world’s best-known cryptocurrency climb above $40,000/coin for the first time, before pulling back.
As highlighted previously by Luckbox, retail trading in the United States increased substantially during the pandemic. In 2020, it’s estimated that retail trading activity in equities accounted for nearly 20% of total volume, up from 15% in 2019.
Much like options trading volumes, equity trading volumes also skyrocketed last year. Equity trading volumes were up roughly 55% in 2020 as compared to 2019, rising from 7 billion shares per day on average in 2019 to about 10.9 billion shares per day on average in 2020.
Astoundingly, daily equities trading volume is up to 14.7 billion per day so far in 2021, suggesting the pandemic-related spike in trading activity hasn’t yet peaked.
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Sage Anderson is a pseudonym. The contributor has an extensive background in trading equity derivatives and managing volatility-based portfolios as a former prop trading firm employee. The contributor is not an employee of Luckbox, tastytrade or any affiliated companies. Readers can direct questions about any of the topics covered in this blog post, or any other trading-related subject, to firstname.lastname@example.org.