US options volume may break two billion in 2006

Jim Binder, a spokesman for the OIC, said options volume for the year to date currently stood at around 1.9 billion contracts, and could breach 2.0 billion by the end of 2006. Total US options volume exceeded a billion for the first time in 2004. Since 2003, yearly volume growth has averaged 25%.

Options traders speculate the growth is mostly due to new entrants in the market, including more hedge funds, retail investors and institutional brokers. They said new technology had made more complicated options strategies easier to manage for clients, while also encouraging narrower spreads on exchanges. Technology was also a factor behind the apparent success of an industry-wide drive to promote options to the public.

About 90% of the US options contracts traded so far this year are in single-stock equities, with the remainder made up largely of index options.