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First time ever, US stock options surpass 10 billion contracts

US single-stock and index options contracts set a record for the third consecutive year, more than doubling from three years ago. 

December 30, 2022
4 Minutes
minute read

As the number of traded US options surpassed the 10-billion mark in 2022 for the first time, playing a role in the biggest equity rout in more than a decade, the boom in options shows no signs of slowing down.

TradeAlgo Data

In a year when Nasdaq 100 Index fell 33% and S&P 500 Index fell 20%, options frenzy was a major feature.  

The trading of "puts" - contracts that allow holders to sell - increased by more than 30% compared to 2021, while bullish "call" options declined by 12%.

A second feature was the explosive growth in very short-term contracts, sometimes maturing within 24 hours.

According to Goldman Sachs, S&P 500 options expiring within one day accounted for more than 40% of total volume over the third quarter, almost doubling from six months earlier.

Short-dated option markets are increasingly attracting professional traders and algorithmic-powered institutions, especially around crucial data releases.

Many see such options as contributing to volatility since holders trade in and out quickly.

In spite of the overall record, year-on-year growth in options trading slowed in 2022 after rising by a third in 2021.

There was a huge demand for leveraged investments such as options and other derivatives in 2021 and 2020 driven by small-fry retail traders interested in tech shares and so-called meme stocks such as GameStop Corp.

Eric Ng
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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