Volatility has roared back into the market in March. In contrast to the bleak outlook and dramatic price declines in March 2020, this month has shown decidedly two-way markets with a heavy influence from widely held tech stocks. So far this month, the S&P has on average moved about twice as much per day as it had in January and February. The tech influence is reflected in price moves in the NYSE FANG+ Index, which has shown even more price movement than the broader index.
As market activity and volatility has increased, NYSE Group is handling record levels of message traffic on its systems. Growth peaked on March 4th, when NYSE Group systems handled a record 356 billion messages in a single day. Message traffic on NYSE Exchanges was roughly 2.6 times average Q4 2020 levels and did not cause any change to client throughput or latency experiences.
(Q4 2020 average=100)
Along with daily price action and record messaging levels, increased volatility is manifesting itself in other notable ways:
This month has seen dramatic moves across markets, from rates to mega cap tech to retail favored stocks. With ongoing uncertainty around virus mutation, vaccine rollout, and broader governmental fiscal and monetary response, volatility could very well continue going forward. These macroeconomic factors, along with the upcoming quarterly options expiration and index rebalances, are likely to cause heavy trading volume and messaging traffic over the balance of the month.
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.