Last month, the NYSE American and Arca Options Trading Floors partially reopened with reduced headcount and new safety protocols. Following this, open outcry is now back to about half of its pre-Floor closure share of total market volume. Open outcry volume appeared to be drawing volume away from Auction, Complex, and Electronic trades.
|All Floors Closed||Arca Open||American Reopens|
|Jan 1 - Mar 22||Mar 23 - May 3||May 4 - May 25||May 26 - Jun 2|
In large institutional-sized trades of 5,000 contracts or more, we saw that Auction share, which had benefitted the most from the Floor closures, declined to near pre-Floor closure levels. It appeared these large trades were directed back to the Floors, however, the overall volume of large trades has not recovered to pre-closure levels.
Trade >= 5,000 Contracts
We observed that volume in trades greater than 100 contracts is at six-month lows compared to trades of 100 contracts or fewer, which are at record highs. This is indicative of growth in retail volume as a proportion of industry volume that does not typically trade in open outcry.
The reopening of the NYSE Amex and Arca Options Trading Floors started a healthy migration of options trading back to open outcry. However, even at these elevated industry volume levels, large institutional-sized trades have not fully returned to the market. We anticipate continued growth in open outcry trading as these trades begin to return to the market.
Following the record-setting 40.1 million average daily volume (ADV) in the 1st quarter of this year, Q2 2021 options volume was the 2nd highest of all-time with 37.6 million contracts traded per day. Robust volume was driven in part by market anticipation of a potential earlier rise in interest rates and Fed tapering, as well as increased volume in options on new issues and continued activity in retail-focused stocks.
After-hours trading has been a larger piece of the total trading volume since the onset of the pandemic, with retail presence growing stronger and earnings announcements becoming less of a factor. In this post, we examine the impact of these shifting dynamics on after-hours price discovery and order behavior.
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.