The new power of the options market

Within 'Focus' we comment on extraordinary market events and analyse capital market related special topics. This issue is about the situation on the options market.

The options market has become significantly more relevant in recent years. Options on individual stocks have experienced exceptional growth. In 2021, the volume of traded US options by notional exceeded the value of the traded volume of the underlying equities for the first time. Accordingly, options markets are increasingly influencing equity market movements, particularly in the US and especially in terms of market volatility and event risks. It is therefore essential to understand what this means for markets, who the major players in the options market are and how they are positioned. From these insights, the “state of health” of the equity markets can be derived to eventually make forecasts about volatility and the extent of potential sell-offs, but also rallies.

Ulrich Urbahn, Head of Multi Asset Strategy & Research, and Ludwig Kemper, Analyst Multi Asset Strategy & Research, analyse the situation on the options market.

Ulrich Urbahn
Head of Multi Asset Strategy & Research
Ludwig Kemper
Multi Asset Strategy & Research