Indexes Show Strong Growth
Index options exhibited impressive growth in 2002, as the majority of CBOE's broad-based index products experienced strong volume throughout the course of the year. Index options volume for 2002 totaled 94,365,744 contracts (42,863,031 calls and 51,502,713 puts) traded, a 28% increase over the year-ago level of 73,777,171 contracts. Average daily volume in index options was 374,467 contracts traded, while, at the close of 2002, open interest in index options trading stood at 12,119,702 contracts, 51% higher than the close of trading last year, when open interest stood at 8,012,784 contracts. Index options volume concluded 2002 by registering gains over year-ago levels for the last eight consecutive months.
The S&P 500 Index (SPX) was the most-actively traded index options at CBOE in 2002 with volume of 29,939,598 contracts, a 31% increase over 2001's total of 22,829,042 contracts. Options on the Nasdaq-100 Index Tracking Stock (QQQ) totaled 24,052,423 contracts traded in 2002, an 18% increase over 2001's total of 20,314,749 contracts. The S&P 100 Index (OEX) options also posted impressive gains in 2002 as 13,530,159 contracts traded, up 36% from the 2001 total of 9,925,592 contracts. The S&P 100 Index (XEO) options with European style exercise spiked dramatically in 2002 with 1,708,074 contracts traded, an increase of 261% over the 2001 total of 473,625 contracts. Trading in the Russell 2000 Index (RUT) also rose in 2002 as 386,262 contracts traded, 19% higher than the 325,157 contracts from 2001.
Volume in options on the Dow Jones Industrial Average (DJX) surged in 2002, totaling 12,114,841 contracts traded, up 35% over 2001's total of 8,958,075 contracts. Options on DIAMONDS (DIA), which were launched at CBOE on May 20, 2002, totaled 4,500,093 contracts traded for the year. Additionally, in 2002, the total options volume for DJX and DIA combined was up approximately 85% over 2001.
The CBOE BuyWrite Monthly Index (BXM) closed 2002 16.7 percentage points ahead of the S&P 500 Index (BXM down 6.7% versus S&P 500 down 23.4%). The BXM is a benchmark index that measures potential returns of a theoretical portfolio that systematically sells S&P 500 Index (SPX) call options against a portfolio of Standard and Poor's 500 Index stocks. More information about the BXM and covered call strategies can be found at www.cboe.com/bxm.
Exchange-Traded Funds Popular With Investors
Mirroring the success of the index products, volume in exchange-traded funds at CBOE increased during 2002. Exchange-traded funds (ETFs) are index-based investment products that allow investors to buy or sell shares of entire portfolios of stock in a single security. For the year, total ETF volume at CBOE was 30,362,691 contracts (15,443,494 calls and 14,919,197 puts) traded, an increase of 39% over 2001's total of 21,767,252 contracts. Average daily volume in ETFs was 120,487 contracts, while open interest reached 7,003,546 contracts at year-end, an increase of 78% over the 3,937,181 contracts at the end of 2001.
Stock Options Volume Drops
Reflecting the market slump that continues to engulf Wall Street and the stock market as a whole, stock options volume decreased in 2002 at CBOE. Total stock options volume for 2002 tallied 173,207,520 contracts (105,620,741 calls and 67,586,779 puts) traded, down 26% from the 232,851,089 contracts traded in 2001. Average daily volume in stock options was 687,331 contracts, while, at the close of 2002, open interest in stock options trading stood at 81,343,419 contracts (the equivalent of 8.13 billion shares of stock),a 10% increase over the 2001 total of 73,887,799 contracts.
The ten most active classes in 2002 based on average daily volume were (in order): Tyco International Limited (TYC), Microsoft Corporation (MSFT), Cisco Systems, Inc. (CSCO), General Electric Company (GE), AOL Time Warner, Inc. (AOL), International Business Machines Corporation (IBM), Citigroup, Inc. (C), Intel Corporation (INTC), Oracle Corporation (ORCL), and Dell Computer Corporation (DELL).
Six Individual Volume Records Established
During 2002, CBOE established several new volume records, including: Dow Jones Industrial Average (DJX) volume in a single month: 1,485,582 contracts in July 2002; Dow Jones Industrial Average (DJX) volume in a single day: 138,910 contracts on September 18, 2002; S&P 500 Index (SPX) volume in a single month: 3,859,734 contracts in July 2002; Nasdaq-100 Index Tracking Stock (QQQ) options volume in a single month: 2,508,407 contracts in October 2002; Nasdaq-100 Index Tracking Stock (QQQ) shares volume in a single day: 1,341,900 on July 22, 2002; and DIAMONDS (DIA) options volume in a single day: 140,957 contracts on October 10, 2002.
CBOE Expands Product Offerings With New Listings
CBOE listed 331 new option classes during 2002, and at the close of the year, the total number of stock option classes listed at CBOE was 1,430. Additionally, options on 23 new indexes and exchange-traded fund products were added in 2002, among them: Diamonds Trust, Series I (DIA); streetTracks Dow Jones Global Titans Index Fund (DGT); iShares MSCI EAFE Index Fund (EFA); twelve Russell ETFs; three Dow Jones ETFs; four Goldman Sachs ETFs; and one Nasdaq ETF.
Chairman and CEO William J. Brodsky Comments
CBOE Chairman and CEO William J. Brodsky comments, "2002 was a challenging year for the securities industry as a procession of unfortunate events undermined the public's confidence in our markets. The slump in the equities market this year reflected this prevailing negative sentiment among investors.
"Yet, in spite of these difficult conditions, CBOE experienced the third largest annual volume total in its history with over 267 million contracts traded. The Exchange did so by continuing to diversify and innovate.
"CBOE diversified its product offerings by aggressively adding new listings, both in terms of individual stocks and through an assortment of new structured products. Additionally, OneChicago, the joint venture of Chicago exchanges to electronically trade single stock futures and narrow-based index futures launched on November 8, 2002 and is off to an encouraging start. On the technology front, CBOE instituted many new technological developments to facilitate efficient order execution.
"We are excited by the possibilities that the New Year holds in store. One of our most significant initiatives will be the launch of our hybrid trading model, which will meld the unparalleled market depth and liquidity of our trading floor with the functionality of screen-based trading, creating a unique trading environment. CBOE created the listed options business 29 years ago, and as we celebrate our 30th anniversary in 2003, we intend to do nothing less than reinvent it."
December 2002 Volume At 17.8 Million Contracts
For the eighth consecutive month, index options led gains at CBOE, as total index options volume in December 2002 totaled 7,489,027 contracts (3,337,567 calls and 4,151,460 puts) traded, an increase of 54% over the year-ago total of 4,871,069 contracts. For the month, a total of 10,335,685 stock options contracts (6,514,669 calls and 3,821,016 puts) traded, down 33% from the 15,424,385 contracts from 2001. CBOE exchange-wide volume totaled 17,829,539 contracts (9,854,257 calls and 7,975,282 puts) traded in December 2002, a decline of 12% over the year-ago total of 20,299,860 contracts. Average daily volume in December was 849,026 contracts, while, at month's end, open interest stood at 93,472,074 contracts, 14% above the 81,906,961 contracts from December 2001.
CBOE, the world's largest options marketplace and the creator of listed options, is regulated by the Securities and Exchange Commission (SEC). For additional information about the CBOE and its products, access the CBOE web site at www.cboe.com.
