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Options on ETFs Are Too Big to Ignore

January 19, 2017

Some facts are too big to ignore and some trends too dramatic to dismiss. When you look at the growth of options on ETFs, the numbers speak for themselves. According to OCC, the world's largest equity derivatives clearing organization, options on ETFs accounted for nearly 41% of all U.S. options volume in 2016. This is a 6.7% increase from 2015. When you look at the volume growth of options on ETFs over the last 11 years, 2016 was the second highest year for growth, with more than 1.6 billion options contracts cleared by OCC. In fact, since 2006, U.S. volume for options on ETFs has more than quadrupled.

This growth reflects U.S. ETF assets under management. According to ETF.com, U.S.-listed ETFs closed out the year with $2.56 trillion in assets, an 11% increase over 2015. The fastest growing ETF segment in 2016 was Alternatives with a 62% growth in assets. Alternatives is the segment in which ETFs that use options are included. Also, according to PwC (PricewaterhouseCoopers), ETF assets under management are expected to exceed $7 trillion by 2021.

The Options Industry Council (OIC), an industry cooperative supported by OCC and the options exchanges that celebrates its 25th anniversary this year, continues to focus on major industry trends and on its mission to increase awareness and responsible use of exchange-listed options among global investors. OIC is a strong supporter of the ETF community, with such support including participation in InsideETFs, the world's largest ETF conference, and the OIC Options and ETFs Online Summit in 2015, which attracted a total of 2,521 session registrations, 1,015 unique visitors, 978 live attendees, and 313 on-demand participants. Further, OIC contributes options content to ETF.com, which has more than 190,000 unique visitors per month, and we also contribute to ETF Report, the monthly print publication with a distribution of 25,000 - mostly financial advisors.

As another example of OIC's support, on January 23, 2017, OIC will sponsor InsideETFs, where we will lead the panel discussion, Redefining Risk: Solving Your Clients' Biggest Challenges With Options Strategies. This all-woman panel discussion will be moderated by me and will include Stacey Gilbert, Head of Derivative Strategy, Susquehanna Financial Group; OIC Advisor Leadership Council member Fariba Ronnasi, CEO at Elite Wealth Management; and Donna Walton, Managing Director, Raymond James.

As we proceed in 2017, OIC plans to launch 17 animated options strategy videos as well as live webinars that educate investors about the responsible use of options on ETFs.

This web site discusses exchange-traded options issued by The Options Clearing Corporation. No statement in this web site is to be construed as an endorsement, recommendation or solicitation to purchase or sell a security, or to provide investment advice. Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of the disclosure document, Characteristics and Risks of Standardized Options. Individuals should not enter into option transactions until they have read and understood this document. To obtain copies, contact your broker, any exchange on which options are traded, or The Options Clearing Corporation, 125 S. Franklin Street, Suite 1200, Chicago, IL 60606 (investorservices@theocc.com).