News & Insights


3 Reasons the Recent Growth in Option-Based Funds is Encouraging: "119 Funds, Improved Liquidity, New Products."


by The MAI TeamApril.27.2015

Over the past three years, the number of option-based funds has grown by 56% as indicated in this chart from the CBOE. 

Source:  http://www.cboe.com/rmc/2015/Day-1-Session-2-Black-Szado-projector.pdf

 

We are quite encouraged by this recent trend for the following reasons:

 

1.     119 - 119 funds have been created that are using option strategies as of 2014, up from 10 in the year 2000. 

2.     Improved liquidity - An increase in the number of funds, we think could improve liquidity reducing overall trading costs.

3.     Introduction of new products - With the increased number of "users", we have seen product enhancements (today there are 410 names that offer weekly options compared to 35 names in 2010).  We have frequently discussed the increase in the number of stocks that have weekly options.  The CBOE continues to add additional names meeting the needs of our growing option community.

 

The article "Options Based Funds Outperform with Lower Volatility" by DailyAlts, concludes “option-based strategies have had lower annual standard deviation than Treasurys, the S&P 500, the MSCI EAFE, and the S&P GSCI since 2000.” Link >>

 

 

Please send your questions, comments and feedback to: info@mai.capital. Any statistics mentioned have been obtained from sources we believed to be reliable, but the accuracy and completeness of the information cannot be guaranteed. Any statement non-factual in nature constitutes only current opinion of this author which is subject to change without notice. Neither the information nor any views expressed should be considered as investment advice or constitute as a recommendation to buy or sell any security, strategy or product nor should it be considered as a forecast of future events or a guarantee of future results.

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