Cboe Global Markets has cited the increased use of its flagship S&P 500 Index (SPX) options by institutional investors for new trading volume records in the benchmark US volatility products.

The Chicago-based options giant on Tuesday saw an all-time record in trading of SPX options, with 4.4 million lots changing hands. That is a continuation of a recent trend, with six of the products' top ten trading days coming in the past six weeks, according to data provided by the exchange. The previous high before Tuesday was 4.28 million contracts on October 6.

“In this period of macro uncertainty participants, particularly institutional investors, have been turning to options to help navigate portfolio level volatility or express directional views,” Mandy Xu, the group's head of derivatives market intelligence said in an interview. “When there is uncertainty we tend to see an uptick in institutional investors looking to crystallise the risk/reward profile of taking a directional view. Where people are unsure of the macro backdrop, they can limit their downside by using options to position themselves.”

Tuesday saw an increase in trading activity in longer tenors with an uptick in call options after a surprise rally in the S&P 500 following the US Consumer Price Index data release.

"We are seeing increased turnover in the more traditional, longer tenors, which points to those traders driving these record days,” Xu added. “A huge part of what has been driving the recent price action is that those investors have been underweight equities and caught wrongfooted in this rally going into the end of the year.

“The sell-off we saw in September and October was actually very orderly, because everyone was positioned for a pullback. The flurry of activity has actually been spurred by the surprise move to the upside that we have seen more recently. If you look at the volume in SPX options, the put/call ratio hit a one year low on Tuesday – meaning that a lot of the volume was on the call-side, as investors scrambled to gain upside exposure going into year-end.”

Much attention has been drawn to Cboe’s zero-day-to-expiry (0DTE) options suite, after the short dated contracts made up nearly 43% of the SPX volume in the first quarter, which represented a doubling of market share in two years. Those products have since climbed to over 50% of the market on some days this year.

“Over the past two years, there has been a clear increase in the use of index options, and particularly SPX. A big part of that has been this underlying trend of growth in 0DTE options, usually making up anywhere between 40% to 50% of volume on any given day in 2023,” she added. “Beyond that though, we have seen other notable factors driving single day records. For example, on the record day on Tuesday in SPX, 0DTE made up a relatively smaller 34% of volume – with the bulk of the increase coming from trading activity in options expiring in December.”

Cboe earlier this month reported quarterly revenues up 9% year-on-year to a record $481 million (£387m), including a 14% jump in its options business which generated $290.8 million in the three months to the end of September.