Tech-led selloff drives record volume in NDX options
Tweet
Share
E-mail
A screen displays the logo of Lineage, the world’s largest global temperature-controlled warehouse as it holds an initial public offering (IPO) at the Nasdaq MarketSite, at Times Square in New York City, U.S., on July 25, 2024. REUTERS/Eduardo Munoz
By Saqib Iqbal Ahmed
NEW YORK (Reuters) - The selloff in U.S. stocks is driving record trading options on the Nasdaq 100 Index as the tech-heavy gauge is battered by turbulence in giant tech stocks.
The index - in which about 70% of the companies represented are tech - has slipped 7% from its July 10 record high in a tumble that has rattled the megacap names which have powered markets higher this year. By comparison, the S&P 500 is off 4% from its record, also set earlier this month.
Options trading on the index has grown as stocks have fallen, driven partly by investors seeking to hedge exposure to technology stocks. The NDX's one-month average daily options trading volume has risen to 62,000 contracts a day, the highest ever, according to a Reuters analysis of Trade Alert data. While that is nowhere close to the 3.9 million contracts traded on average daily on the Invesco QQQ ETF - an ETF that tracks the Nasdaq 100 index - NDX options volume has leaped to a record high even as QQQ options volume remains shy of the high hit during the market selloff in October last year.
The popularity of NDX options has tended to suffer because they are comparatively more expensive than derivatives on other indexes. With the index value at roughly four times the S&P 500, options on the NDX require a far larger outlay to trade, compared with QQQ contracts.
Still, tech stocks being at the center of the recent market ructions has boosted the attractiveness of the contracts. "It's becoming increasingly clear that the top stocks in NDX are the ones driving the S&P 500," said Steve Sosnick, chief strategist at Interactive Brokers.
(Reporting by Saqib Iqbal Ahmed; Editing by Daniel Wallis)
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- AI wizkid Leopold Aschenbrenner forced to sell entire portfolio after rout
- TSMC is moving in on Intel’s turf; Why Intel is up anyway
- Mizuho upgrades Bloom Energy to Outperform on stronger execution, margin expansion
Create E-mail Alert Related Categories
General News, Options, ReutersSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
