Options on Futures: A Market Primed For Further Expansion

Since their launch more than 30 years ago, options on futures (OOFs) — also known as “futures options” — have gained steady traction, as evidenced by increasing year-over-year volumes and new product launches. But the market can become much larger. Going forward, rising demand from institutions, electronification and improved market access will drive constant volume growth. Futures options trading has exploded in recent years as a number of forces have merged to create an enticing proposition for investors. Market participants have been drawn to both growing liquidity and market characteristics that have evolved to turn the market into a trading arena that today can support increasingly sophisticated investment strategies.

Over the next few years, TABB Group expects continued growth across products. Markets will grow as interest rate policies change, alternative energy sources emerge and underlying reference futures markets appeal to a wider audience. As the markets increase – and entering and exiting them becomes easier to manage – futures options will become even more attractive to investors.