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- The volume of trading in all derivatives was 641.2 thousand instruments in May 2014.
- The number of open interest was 285.4 thousand at the end of May 2014.
“The results reported for last month are below our expectations, which however was due to several factors, most importantly low market liquidity. Other European exchanges had the same problem in that period. It had a particularly adverse impact on the derivatives market,” said WSE Vice-President Paweł Graniewski.
WIG20 futures
May 2014 is the last full month when WIG20 futures with a multiplier of PLN 10 and WIG20 futures with a multiplier of PLN 20 will be available in trading on the exchange at the same time. The total volume of trading in WIG20 futures was 430.3 thousand contracts in May 2014 and the number of open interest was 127.3 thousand contracts at the end of May 2014. The last day of concurrent trading of both types of contracts will be 20 June 2014. Only WIG20 futures with a multiplier of PLN 20 will be available in trading after that date.
mWIG40 futures
Interest in WIG40 futures remained at the highest historical level. The incremental volume of trading was 52.3 thousand contracts year to date (5 months), which was 4 times more than in the same period of 2013. The number of open interest was 2.5 thousand contracts at the end of May 2014.
Options
The volume of trading in WIG20 options was 28.4 thousand options in May 2014 and the number of open interest was 43 thousand options at the end of May 2014. The incremental volume of trading was 181.6 thousand options year to date, a decrease of 43% year on year.
Single-stock futures
The volume of trading in single-stock futures was 32.6 thousand contracts in May 2014 and the number of open interest was 10.2 thousand contracts at the end of May 2014. The incremental volume of trading was 224.0 thousand contracts year to date, a decrease of 28% year on year. The most traded single-stock futures in May were:
No. Underlying Trading volume (#)
1. PKOBP S.A. 7 832
2. KGHM S.A. 7 094
3. PKN ORLEN S.A. 6 004
4. PGE S.A. 4 551
5. JSW S.A. 2 300
Currency futures
The volume of trading in currency futures was 141.9 thousand contracts in May 2014 and the number of open interest was 93.4 thousand contracts at the end of May 2014. The incremental volume of trading was 909.6 thousand contracts year to date, a decrease of 17% year on year. The most traded currency futures in May 2014 were USD/PLN futures. The volume of trading in USD/PLN futures was 130.7 thousand contracts, representing 92% of the volume of trading in all currency futures.
For more statistics, see Table 1 and Figures 1 and 2.
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Derivative instruments are the most effective tool which can be used to manage specific risks. Derivatives based on indices and single stocks can be used to manage market risk, for instance to hedge an existing equities portfolio against a decrease in value. Currency futures can be used to hedge against the risk of disadvantageous changes of an exchange rate. This means that derivatives can be used for instance by entities which hold specific currency positions with respect to the following exchange rates: USD/PLN, EUR/PLN, CHF/PLN. Particularly important are options, which provide great flexibility in building hedging strategies. WSE lists options which expire on four different dates; many series of call and put options with different strike prices are available for each expiry date. Options can be used to build hedging strategies according to different market scenarios and at a different cost of hedging.
Derivative instruments are also an effective investment tool. Derivatives can be profitable when the value of the underlying instrument increases or decreases. Investments in derivatives involve a high leverage. Again, options are particularly important due to their various applications. Options can be used not only to invest in an expected increase or decrease of the value of the underlying instrument but also an increase or decrease of market volatility, etc. Arbitrage strategies, employed mainly by institutional investors, are a special variety of investment strategies.
