Market volatility is expected to increase under Donald Trump’s presidency, fueling a surge in options trading by individual traders.
Geopolitical tensions, tariffs, and governmental policy uncertainties are all likely to exacerbate price fluctuations and make options more alluring. To deal in short-term options on exchange-traded funds and equity indexes, retail investors have already flocked to trading applications such as Robinhood Markets Inc.
Businesses like Trading Technologies International Inc. (TT) and CQG are already preparing to gain from that. Beginning early in the upcoming year, Chicago-based TT will provide customers with access to products, such as Cboe’s flagship S&P 500 options. Later that year, CQG will provide traders with additional tools and the capacity to execute more intricate deals by introducing equity options starting in the middle of 2025.
“You’re going to see more volatility spikes,” Kevin Darby, vice president of execution technologies at CQG, said in an interview this week at the Futures Industry Association Expo in Chicago. “When volatility goes up, volume goes up as well, so we’re going to see a lot of options volumes in 2025, in 2026.”
The main driver of the 60% increase in total volume since 2020 has been zero-day-to-expiry options (0DTE) on indexes and ETFs. The volume of ultra-short-term contracts has increased to around half of that of S&P 500 options. As support for extending the 0DTE options to individual equities grows, conference participants discussed the necessity of shielding regular investors from unforeseen dangers.
There are complications around short-dated options positions that “all the market participants, including small retail accounts, need to understand to have a good experience,” Henry Schwartz, global head of client engagement, data and access at Cboe Global Markets, said at the event. “Whether they’re making money or losing money, we want them to know what they’re doing and want it to be as kind of fair as possible.”
Options Clearing Corp. is already working to give options traders more safeguards. If brokers’ and dealers’ risk exposures exceed predetermined thresholds, the clearing house intends to tighten regulations on intraday margins.
However, the sophistication of retail investors has increased. “While many people in places like the US already manage their retirement accounts and know how to trade, younger traders are applying lessons from gaming,” said Keith Todd, CEO of TT.
“The retail customer base can digest more complexity,” said CQG’s Darby. “They’re able to digest more complex financial products like options or binaries or event contracts and stuff like that.”
The business is moving toward 24-hour, seven-day trading as a result of the increased demand for options not just in the US but also in other countries, especially India and Asia. Exchange hours will probably only grow, even though nonstop trading is not yet possible. Companies like TT are drawn to this global expansion, according to Alun Green, managing director of futures and options at the company.
“It’s not just in India. We’re seeing it across Southeast Asia, in Taiwan, South Korea,” Green said. “You’ve got a lot of appetite to go for new international products.”
