KNOW YOUR OPTIONS

August 23, 2010

CBOE Sees First-Half Volume Increase
The CBOE registered an average daily volume of 4.9 million contracts through the first six months of 2010, a 7 percent increase from the prior year’s first half. In all, the CBOE saw 610.7 million contracts traded during the first half of 2010.

The first half saw the ADV for ETF options increase by 11 percent, while the ADV for index options rose 39 percent. Although ADV for the month of June was down 2 percent from the prior year, ETF and index options for June saw their ADVs increase by 16 percent and 24 percent, respectively, from June 2009.

The most actively traded options on ETFs and indexes as a group were the following: S&P 500 Index (SPX), Standard & Poor’s Depositary Receipts (NYSE Arca: SPY), CBOE Volatility Index (VIX), PowerShares QQQ Trust (NasdaqGM: QQQQ) and iShares Russell 2000 Index Fund (NYSE Arca: IWM).

NYSE Launches ETN Options
A May 28 announcement from NYSE Euronext detailed the launch of options contracts tied to nine ETNs.

Options began trading that day on the iPath S&P 500 VIX Short-Term Futures ETN (NYSE Arca: VXX), iPath S&P 500 VIX Mid-Term Futures ETN (NYSE Arca: VXZ), iPath Goldman Sachs Crude Oil Total Return Index ETN (NYSE Arca: OIL), JPMorgan Alerian MLP Index ETN (NYSE Arca: AMJ), iPath Dow Jones-UBS Natural Gas Total Return Sub-Index ETN (NYSE Arca: GAZ), iPath Dow Jones-UBS Copper Total Return Sub-Index ETN (NYSE Arca: JJC), Credit Suisse Cushing 30 MLP Index ETN (NYSE Arca: MLPN), Elements Linked to the Rogers International Commodity Index Total Return (NYSE Arca: RJI) and Elements Linked to the Rogers International Commodity Index Agriculture Total Return ETN (NYSE Arca: RJA).

VXX’s and VXZ’s options contracts trade on both the NYSE Amex and NYSE Arca, while OIL’s contracts trade only on the NYSE Amex and the rest of the contracts trade only on the NYSE Arca.

CBOE Launches VIX ETN Options
In late May, options on the iPath S&P 500 VIX Short-Term Futures Index ETN (NYSE Arca: VXX) and the iPath S&P 500 Mid-Term Futures Index ETN (NYSE Arca: VXZ) began trading on the CBOE.

The two ETNs were launched in the first quarter of 2009, and have seen quite a bit of success. VXZ has accumulated almost $600 million in assets, and VXX is well past the $1 billion mark—both are sizable amounts for ETNs.

Barclays Capital is the designated primary market maker for the options, while Group One Trading is the on-floor lead market maker.

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