U.S. stock market volatility increases... Increase in option trading due to expansion of ants entry

The Wall Street Journal (WSJ) reported on the 26th (local time) that it is pointed out that individual investors in the US stock market are increasing volatility in the stock market as individual investors are jumping into option trading.

According to OCC, an option settlement and clearing house in the US, the average daily number of option transactions this year was 39 million, an increase of 31% from last year, the highest since the opening of the options market in 1973.

According to data from the Chicago Options Exchange (CBOE), 9 out of the 10 largest call options trading days ever occurred this year.

The influence of individual investors in option trading is not small.

According to the CBOE, option trading by individual investors has quadrupled in the past five years.

Thanks to this, the daily average nominal value of single stock-linked option transactions this year was $432 billion, exceeding the stock transaction amount ($44 billion) for the first time in history.

For example, the nominal value of options trading on Apple was $20 billion per day on average, higher than the $12 billion traded value of Apple stock.

In this regard, the Journal evaluated that the volatility of the stock market could increase further as options trading increased to an unprecedented level due to the increased participation of individual investors.

When an individual investor buys a call option in anticipation of an increase in the stock price, the call option seller buys the spot stock to diversify the transaction risk, which causes the stock price to rise.

However, a put option that is bought when the stock price is expected to decline increases volatility in the opposite direction to that of a call option.

Stock market experts believe that options trading further fueled the sell-off of Hengda shares when Hengda (恒大, Evergrande), a large real estate developer in China, recently plunged due to default (default) concerns, the Journal reported.