From a quiet revolution to a record-shattering boom, the options market exploded in 2023 as billions in contracts changed hands, signaling a dramatic shift in how investors are approaching the markets.
Key Takeaways
- In 2023, The Options Clearing Corporation (OCC) cleared a record 11.95 billion options contracts, marking a 10.9% increase from 2022
- U.S. options average daily volume (ADV) reached 48.5 million contracts in 2023, up 12% year-over-year
- SPX options alone accounted for 1.36 billion contracts in 2023, representing 25% of total U.S. volume
- In 2023, total U.S. options open interest exceeded 45 million contracts at year-end, up 8% from 2022
- SPX options open interest reached 3.2 million contracts in Dec 2023
- Equity options open interest averaged 32 million contracts daily in 2023
- Overall U.S. options market grew at CAGR 15.2% from 2018-2023
- Options notional value traded exceeded $1.5 quadrillion in 2023, up 18%
- Number of underlyings with options trading rose 12% to 2,500 in 2023
- In 2023, SPX options represented 28% of total U.S. options volume, highest ever
- Equity options comprised 55% of total volume in 2023
- Index options volume totaled 3.8 billion contracts in 2023
- Average VIX level in 2023 was 17.5, down from 2022's 21.2
- VIX hit intraday high of 36.45 on Oct 27, 2023 amid Middle East tensions
- VVIX (VIX of VIX) averaged 95 in 2023, peaking at 150
Options trading hit record highs in 2023, driven by surging retail activity and new products.
Market Growth
- Overall U.S. options market grew at CAGR 15.2% from 2018-2023
- Options notional value traded exceeded $1.5 quadrillion in 2023, up 18%
- Number of underlyings with options trading rose 12% to 2,500 in 2023
- 0DTE options market share grew from 5% to 43% of SPX volume 2022-2023
- International options volume up 25% globally in 2023 per FIA
- U.S. options market cap exposure $50 trillion end-2023
- Adoption of multi-leg strategies up 30% in retail trading 2023
- Options trading apps downloads surged 40% YoY in 2023
- Retail participation in options reached 25% of volume in 2023
- AUM in options-linked ETFs grew 22% to $200 billion 2023
- Volatility products market expanded 35% in trading value 2023
- Crypto options market cap grew 150% to $10 billion 2023
- Number of clearing members for options up 10% to 120 in 2023
- Average trade size in options declined 5% to 1.2 contracts due to retail
- Global derivatives market options share 40% of total volume 2023
- U.S. equity options growth 16% vs futures 8% in 2023
- End-user options trading volume up 28% in 2023 per FIA
- Options premium turnover $400 billion monthly avg 2023
- SPX options market grew 20% in notional terms 2023
- Equity options notional outstanding $25 trillion end-2023
Market Growth Interpretation
Despite the eye-popping $1.5 quadrillion in notional trades, the explosion of 0DTE gambling, and apps making options as easy as ordering takeout, the market's breathtaking 15% annual growth is underpinned by a more sobering expansion into every conceivable asset class and strategy, proving that Wall Street's favorite casino is now a dangerously mainstream global institution.
Open Interest
- In 2023, total U.S. options open interest exceeded 45 million contracts at year-end, up 8% from 2022
- SPX options open interest reached 3.2 million contracts in Dec 2023
- Equity options open interest averaged 32 million contracts daily in 2023
- VIX futures and options open interest hit 1.5 million in Q4 2023
- ETF options open interest grew to 8.7 million contracts by end-2023
- Russell 2000 index options OI peaked at 450,000 contracts in 2023
- Total industry open interest 42.1 million contracts end-Q3 2023
- Nano options open interest reached 200,000 contracts within months of launch
- SPY ETF open interest averaged 2.5 million contracts in 2023
- Non-index equity OI 25 million contracts end-2023
- QQQ open interest 1.8 million contracts peak 2023
- 0DTE options contributed to 15% rise in daily OI turnover 2023
- IWM open interest 900,000 contracts average 2023
- Total options OI across Cboe exchanges 25 million end-2023
- FX options open interest $150 billion notional globally H1 2023
- E-mini Nasdaq-100 options OI 600,000 contracts 2023 avg
- ARKK options OI 150,000 contracts peak volatility periods 2023
- Weekly options OI stable at 5 million contracts monthly avg 2023
- Bitcoin options OI on CME $2 billion notional end-2023
Open Interest Interpretation
It seems America has traded baseball cards for options contracts, turning market hedging into the nation's new, caffeinated pastime.
Product Specific
- In 2023, SPX options represented 28% of total U.S. options volume, highest ever
- Equity options comprised 55% of total volume in 2023
- Index options volume totaled 3.8 billion contracts in 2023
- ETF options made up 20% of volume, 1.9 billion contracts 2023
- VIX options volume 402 million, 4% of total U.S. market 2023
- Russell 2000 (RUT) options 350 million contracts traded 2023
- NDX options volume 250 million contracts in 2023
- Single stock options volume dominated by top 50 underlyings at 70% share
- SPY options 1.2 billion contracts, largest ETF product 2023
- QQQ options 900 million contracts traded 2023
- IWM options 500 million contracts, key small-cap product
- 0DTE products across SPX/RUT/NDX totaled 3 billion contracts 2023
- Nano SPX options volume 50 million in first year
- FX options on CME averaged $100 billion daily notional 2023
- Bitcoin options on Deribit 60% market share crypto options 2023
- Weekly SPX options volume 800 million contracts 2023
- ARCA options volume on NYSE 1.5 billion contracts 2023
- PHLX gold options (OEX) niche volume 20 million 2023
- ETP options excluding ETF 5% share of equity volume 2023
- XSP mini-SPX options 150 million contracts 2023
- Total VIX product suite volume 500 million contracts 2023
Product Specific Interpretation
The market spent 2023 screaming into the SPX megaphone while dabbling in everything from nano bets to gold whispers, proving that while traders love to diversify their drama, they really just want to supercharge their views on the S&P 500.
Trading Volume
- In 2023, The Options Clearing Corporation (OCC) cleared a record 11.95 billion options contracts, marking a 10.9% increase from 2022
- U.S. options average daily volume (ADV) reached 48.5 million contracts in 2023, up 12% year-over-year
- SPX options alone accounted for 1.36 billion contracts in 2023, representing 25% of total U.S. volume
- Equity options volume hit 5.9 billion contracts in 2023 via OCC, a 15% rise from prior year
- December 2023 saw U.S. options ADV of 51.2 million contracts, highest monthly ever
- VIX options volume reached 402 million contracts in 2023, up 20%
- Russell 2000 (RUT) options ADV averaged 1.2 million contracts in Q4 2023
- ETF options volume surged to 1.8 billion contracts in 2023, 25% growth
- January 2024 options ADV hit 52.3 million, new record
- Nano equity options launched with 10 million contracts traded in first month
- Total U.S. listed options volume in 2022 was 10.8 billion contracts
- Q3 2023 options volume totaled 3.2 billion contracts, up 15%
- SPY ETF options ADV 2.1 million contracts daily in 2023 average
- Non-index equity options volume 4.5 billion in 2023
- February 2024 ADV 49.8 million contracts amid volatility
- IWM options volume 450 million contracts in 2023
- QQQ options ADV 1.5 million in H2 2023
- Total industry options volume Oct 2023: 2.1 billion contracts
- 0DTE SPX options traded 2.5 billion contracts in 2023, 40% of SPX volume
- OCC cleared 1.2 billion contracts in Q1 2023 alone
- ADV for U.S. options in Nov 2023: 47.6 million
- FX options volume globally $6.5 trillion notional in H1 2023
- E-mini S&P 500 options ADV 1.8 million in 2023
- Total options ADV across exchanges 45.2 million in 2023 avg
- ARKK options volume peaked at 500k contracts daily in 2023
- Weekly options volume grew 30% to 1.1 billion in 2023
- March 2024 options volume 2.8 billion contracts monthly
- Bitcoin options volume on Deribit $1.2 trillion notional 2023
- Total equity options put/call ratio volume 1.2:1 in 2023
- April 2023 peak day volume 65.4 million contracts
Trading Volume Interpretation
It seems everyone decided 2023 was the year to trade their crystal ball for an options chain, with record volumes revealing a market both hedging its bets and chasing its tail with unprecedented fervor.
Volatility Metrics
- Average VIX level in 2023 was 17.5, down from 2022's 21.2
- VIX hit intraday high of 36.45 on Oct 27, 2023 amid Middle East tensions
- VVIX (VIX of VIX) averaged 95 in 2023, peaking at 150
- Realized volatility of S&P 500 averaged 15% annualized in 2023
- Implied volatility skew for SPX options steepened 5% in Q4 2023
- 30-day ATM SPX IV averaged 18.2% in 2023
- VIX futures contango averaged 2% monthly in low vol 2023 periods
- Options gamma exposure peaked at $500 billion for SPX dealers Q3 2023
- Volatility of volatility (VVIX) correlation to VIX 0.85 in 2023
- Tail risk premia in OTM puts averaged 2.5% yield 2023
- SPX 90-day IV term structure flattened to 1% slope end-2023
- Retail gamma squeeze events caused 3% VIX spikes 5 times in 2023
- Historical vol exceeded IV 20% of trading days in 2023
- VIX ETF AUM $8 billion average 2023
- Dispersion trading vol premia averaged 4% annualized 2023
- Crypto implied vol for BTC options averaged 65% in 2023
- Equity single-name IV premium over index 10% average 2023
- VIX term structure backwardation days totaled 45 in 2023
- Put skew index for SPX rose to 120 in Oct 2023
- Realized vol dispersion across S&P 500 12% avg 2023
Volatility Metrics Interpretation
While traders enjoyed a calmer average market in 2023, the ghosts of volatility never left the party, leaving option desks to nervously navigate a landscape where sudden geopolitical shocks, retail-fueled gamma squeezes, and an acutely anxious volatility-of-volatility index all hinted that the market's quiet confidence was just a thin veneer over a still-jumpy soul.
Sources & References
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