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A little over two months at market and our new Buxl options are seeing impressive volume development: more than 78,000 contracts have traded since the launch in late September. We are seeing a strong liquidity picture in the order book with seven market makers providing prices.
On-book liquidity is provided for the January 2021 and February 2021 expiries, with spread widths of approximately 10%. Open Interest continues to rise from expiration to expiration and currently stands at 30,000 contracts. Options on Euro-Buxl Futures complete our fixed income offering on German government bonds with futures and options available on Bund, Bobl, Schatzl and now Buxl.
The newly listed instruments are efficient and cost-effective, extending trading and hedging opportunities in the 30-year area of the German yield curve.
Themes thus far have been centered around directional positioning. Lee Bartholomew, Eurex’s Head of Fixed Income ETD Product Design further emphasizes the various hedging possibilities that the new contract allows for: “The advantage of this contract for the sell-side pool is that it allows for hedging against their risk – including OTC vol market risk.” He adds that, for instance, market participants are able to hedge OTC exposures (30y gamma) with Buxl options.
Additionally, Lee highlights, that clients can initiate directional and relative value trades via spreads. For example, end-clients may want to express a EUR versus USD vol position and can do so via e.g. Buxl vs UST 30y options. Moreover, end-clients may want to initiate a conditional curve position, which can be achieved by using Bund and Buxl options.
