US derivatives volumes rocket on market fears

Several US derivatives exchanges broke their daily traded volume records by more than 20% during February 28.

The increases were led by the Chicago Mercantile Exchange (CME), which broke its past daily record by 2.7 million contracts to 13.7 million, representing a notional contract value of roughly $8 trillion. The Chicago Board of Trade (CBOT) saw an increase of 3.4 million contracts on its previous record, reaching 11.2 million contracts traded. Both the CME and CBOT also witnessed a new high of 80% of total volumes traded electronically during the day.

Meanwhile, the Chicago Board Options Exchange and New York-based International Securities Exchange broke their past daily records by around 1 million contracts each, to 6.8 million and 5.5 million contracts, respectively. Both the options exchanges pointed to a surge in trading on the Nasdaq-100 Index Tracking Stock in particular.

Randy Frederick, Austin-based director of derivatives at Charles Schwab, said the surges showed a rush to buy protection against unguarded risk. “People who didn’t have the foresight to hedge their positions are now saying: I want to hedge these positions.” He added that premiums on options and futures were, for the most part, still cheap.