May 27, 2021
Execution Strategist, New York Stock Exchange
The surge in market volatility and trading volumes since the onset of the pandemic in March 2020 has impacted numerous aspects of equity market trading. One less-studied area has been after-hours trading. After-hours has also seen changes in order flow trends and influences, and here we examine trends and shifts occurring in these sessions.
At the end of January, stock market news was everywhere from mainstream outlets to Saturday Night Live, as social media seemed to drive unprecedented trading interest in a few stocks. AMC Entertainment (AMC), BlackBerry (BB), GameStop (GME), and Nokia (NOK) received the most attention and saw their combined options ADV increase from 68K contracts in Q4 2020 to over 426K contracts in Q1 2021 − a 523% increase. Overall multi-list options ADV increased 31.3% in that same time frame.
After an extraordinary 2020, the pace of trading activity in the options markets accelerated at the start of 2021. Out of the gate, January multi-list options volume averaged a record 42.1 million contracts per day. Prior to 2020 there had never been a single day with options volume of 40+ million contracts.
The boost in retail trading activity which began during pandemic lockdowns in spring 2020 continues today. This trend has impacted various market behaviors, including opening auctions.